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EXHIBIT 99.1
COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT is made on September 15, 1999
AMONG:
(1) ALCAN ALUMINIUM LIMITED, a company incorporated under the laws of Canada
(CANADA),
(2) PECHINEY, a company incorporated under the laws of France (FRANCE), and
(3) ALUSUISSE LONZA GROUP AG, a company incorporated under the laws of
Switzerland (SWITZERLAND).
WHEREAS:
(A) The respective Boards of Directors of each of Canada, France and
Switzerland (EACH A PARTY, and together the PARTIES) have determined that
it is in the best interest of their respective companies and shareholders
to effect the combination of their respective businesses as set forth
herein (the COMBINATION) in a "merger-of-equals".
(B) In furtherance of the Combination, Canada, France and Switzerland have
previously entered into a memorandum of understanding dated 11 August, 1999
(the MOU) establishing the structure and principal terms of the
Combination, and Canada and Switzerland entered into an agreement (the
INITIAL COMBINATION AGREEMENT) on the same date setting forth the terms and
conditions of a proposed combination between them.
(C) In furtherance of the Combination, the respective Boards of Directors of
Canada, France and Switzerland have approved and adopted this Combination
Agreement (the AGREEMENT) which sets out the terms and conditions for the
Combination.
(D) The respective Boards of Directors of Canada, France and Switzerland have
concluded that the Combination will be effected by utilizing Canada as the
holding company for the new, combined group. As a result, Canada will be
the vehicle through which the Exchange Offers (as defined below) will be
made to shareholders of Switzerland and France, respectively, and shares of
common stock, without par or nominal value, of Canada (CANADA COMMON
SHARES) shall be issued as consideration in the Exchange Offers.
(E) The respective Boards of Directors of Canada and Switzerland have approved
the exchange offer (the SWISS EXCHANGE OFFER) by Canada for all of the
issued and outstanding registered shares, of CHF 100 per share, of
Switzerland (the SWISS SHARES) upon the terms and subject to the conditions
set forth in this Agreement;
(F) The respective Boards of Directors of each of Canada and France have
approved the exchange offer (the FRENCH EXCHANGE OFFER and, together with
the Swiss Exchange Offer, the EXCHANGE OFFERS) by Canada for all of the
issued and outstanding (i) ordinary shares (A), par value EURO 15.25 per
share, of France (the FRENCH ORDINARY SHARES), (ii) preferred shares (B),
par value EURO 15.25 per share, of France (the FRENCH PREFERRED SHARES) and
(iii) the American Depositary Receipts (ADRS) each representing one-half of
a French Ordinary Share (the French Ordinary Shares, French Preferred
Shares and the ADRs are collectively referred to herein as the FRENCH
SHARES);
(G) The respective Boards of Directors of each of Canada and Switzerland have
determined that it is in the best interests of their respective companies
to have Canada and Switzerland enter into a business combination under the
terms of this Agreement whether or not the French Exchange Offer is
completed;
(H) The respective Boards of Directors of each of Canada and France have
determined that it is in the best interests of their respective companies
to have Canada and France enter into a business combination under the terms
of this Agreement whether or not the Swiss Exchange Offer is completed;
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(I) The Parties intend that each Exchange Offer be treated as a tax free
rollover to shareholders for tax purposes to the maximum extent possible;
(J) The Combination (but neither Exchange Offer alone) is intended to be treated
as a "pooling of interests" under generally accepted accounting principles
in Canada (CANADIAN GAAP); and
(K) This Agreement sets out the terms and conditions of the agreement by each of
Canada, France and Switzerland in relation to the Combination and each
Exchange Offer.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, the Parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE 1
THE EXCHANGE OFFERS
1.1 Canada, Switzerland and France agree that Canada, with the full
participation and cooperation of Switzerland and France, will make the Swiss
Exchange Offer and the French Exchange Offer, in each case on the basis and in
accordance with the provisions set out in Schedule 1 and on the terms and
subject to the conditions of this Agreement.
1.2 France represents and warrants to Canada and Switzerland that the Board
of Directors of France has adopted and approved this Agreement and the
Combination and is, concurrently with the execution of this Agreement,
recommending to the holders of French Shares that they accept the French
Exchange Offer when made regardless of whether or not the Swiss Exchange Offer
is consummated in accordance with the terms hereof. Unless permitted in
accordance with Article 1.2.1 below, or otherwise required by law, to withdraw
or adversely modify its recommendation, France agrees with Canada and
Switzerland that it will procure that the Board of Directors of France will
recommend at all times prior to the time the French Exchange Offer is made, at
the time the French Exchange Offer is made and during the period of the French
Exchange Offer, that the holders of French Shares accept the French Exchange
Offer regardless of whether or not the Swiss Exchange Offer is consummated. The
recommendation of the Board of Directors of France shall be contained in all
relevant filings and disclosure documents, as applicable, and may only be
withdrawn as permitted hereby.
1.2.1 Notwithstanding anything to the contrary contained herein, whether or not
the French Exchange Offer shall have commenced, the Board of Directors of France
may withdraw or adversely modify its recommendation that holders of French
Shares tender their French Shares in the French Exchange Offer if (i) any of the
representations and warranties of Canada set forth in this Agreement shall have
become untrue in any respect which, individually or in the aggregate, has
resulted, or would be reasonably likely to result, in a Canada Material Adverse
Effect, (ii) Canada is in material breach of any of its obligations set forth in
this Agreement that is not curable or, if curable is not cured within 15 days
after written notice of such breach is given by France to Canada, (iii) Canada
shall have suffered a Canada Material Adverse Effect, (iv) at the time of the
consummation of the Swiss Exchange Offer the Chemicals Division Demerger shall
not have occurred; provided that France's rights pursuant to this clause (iv)
shall expire two business days following receipt of written notice from Canada
of the consummation of the Swiss Exchange Offer and the failure of the Chemicals
Division Demerger to have occurred if France shall not have exercised any of
such rights prior thereto, or (v) a proposal constituting an Alternative
Transaction (as defined below) for France shall have been made.
1.3 Switzerland represents and warrants to Canada and France that the Board
of Directors of Switzerland has unanimously adopted and approved this Agreement
and the Combination and is, concurrently with the execution of this Agreement,
recommending to the shareholders of Switzerland that they accept the Swiss
Exchange Offer when made, regardless of whether or not the French Exchange Offer
is consummated in accordance with the terms hereof. Unless permitted in
accordance with Article 1.3.1 below, or otherwise required by law to withdraw or
adversely modify its recommendation, Switzerland agrees with Canada and France
that the Board of Directors of Switzerland will unanimously recommend at all
times prior to the time the Swiss Exchange Offer is made, at the time the Swiss
Exchange Offer is made and during the period of the Swiss Exchange Offer, that
the holders of Swiss
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Shares accept the Swiss Exchange Offer regardless of whether or not the French
Exchange Offer is consummated. The recommendation of the Board of Directors of
Switzerland shall be contained in all relevant filings and disclosure documents,
as applicable, and may only be withdrawn as permitted hereby.
1.3.1 Notwithstanding anything to the contrary contained herein, whether or not
the Swiss Exchange Offer shall have been commenced, the Board of Directors of
Switzerland may withdraw or adversely modify its recommendation that
shareholders of Switzerland tender their Swiss Shares in the Swiss Exchange
Offer if (i) any of the representations and warranties of Canada set forth in
this Agreement shall have become untrue in any respect which, individually or in
the aggregate, has resulted, or would be reasonably likely to result, in a
Canada Material Adverse Effect, (ii) Canada is in material breach of any of its
obligations set forth in this Agreement that is not curable or, if curable is
not cured within 15 days after written notice of such breach is given by
Switzerland to Canada, (iii) Canada shall have suffered a Canada Material
Adverse Effect, or (iv) a proposal constituting an Alternative Transaction for
Switzerland shall have been made.
1.4 Canada represents and warrants to France and Switzerland that the Board
of Directors of Canada has unanimously adopted and approved this Agreement, the
Combination and each of the Exchange Offers and is, concurrently with the
execution of this Agreement, recommending to the shareholders of Canada that
they approve the issue of Canada Common Shares in connection with each of the
Swiss Exchange Offer and the French Exchange Offer regardless of whether or not
both Exchange Offers are successful. Unless permitted in accordance with Article
1.4.1 or 1.4.2, as applicable, or 1.4.3, or otherwise required by law to
withdraw or adversely modify its recommendation, Canada agrees with France and
Switzerland that the Board of Directors of Canada will recommend at all times
that the holders of Canada Common Shares approve the issue of Canada Common
Shares in connection with each of the France Exchange Offer and the Swiss
Exchange Offer regardless of whether or not both Exchange Offers are
consummated. The recommendation of the Board of Directors of Canada shall be
contained in all relevant filings and disclosure documents, as applicable, and
may only be withdrawn as permitted hereby.
1.4.1 Notwithstanding anything to the contrary contained herein, whether or not
the French Exchange Offer shall have been commenced, the Board of Directors of
Canada may withdraw or adversely modify its recommendation that shareholders of
Canada approve the issuance of Canada Common Shares in connection with the
French Exchange Offer if (i) any of the representations and warranties of France
set forth in this Agreement shall have become untrue in any respect which,
individually or in the aggregate, has resulted, or would be reasonably likely to
result, in a France Material Adverse Effect, (ii) France is in material breach
of any of its obligations set forth in this Agreement that is not curable or, if
curable is not cured within 15 days after written notice of such breach is given
by Canada to France, or (iii) France shall have suffered a France Material
Adverse Effect.
1.4.2 Notwithstanding anything to the contrary contained herein whether or not
the Swiss Exchange Offer shall have been commenced, the Board of Directors of
Canada may withdraw or adversely modify its recommendation that shareholders of
Canada approve the issuance of Canada Common Shares in connection with the Swiss
Exchange Offer if (i) any of the representations and warranties of Switzerland
set forth in this Agreement shall have become untrue in any respect which,
individually or in the aggregate, has resulted, or would be reasonably likely to
result, in a Swiss Material Adverse Effect, (ii) Switzerland is in material
breach of any of its obligations set forth in this Agreement that is not curable
or, if curable is not cured within 15 days after written notice of such breach
is given by Canada to Switzerland, or (iii) Switzerland shall have suffered a
Swiss Material Adverse Effect.
1.4.3 Notwithstanding anything to the contrary contained herein, whether or not
either Exchange Offer has commenced, the Board of Directors of Canada may modify
or withdraw its recommendation that shareholders of Canada approve the issuance
of Canada Common Shares in connection with both the Swiss Exchange Offer and the
French Exchange Offer if a proposal constituting an Alternative Transaction for
Canada shall have been made.
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ARTICLE 2
COMMENCEMENT OF EXCHANGE OFFERS
2.1.1 Canada shall commence the Swiss Exchange Offer as soon as practicable
following the satisfaction or earlier due waiver of the conditions set out in
Part A of Schedule 2; provided, that Canada shall not be required to commence
the Swiss Exchange Offer if this Agreement has been terminated either with
respect to Switzerland or with respect to all Parties pursuant to Article 8.
2.1.2 Canada shall commence the French Exchange Offer as soon as practicable
following the satisfaction or earlier due waiver of the conditions set out in
Part B of Schedule 2; provided, that Canada shall not be required to commence
the French Exchange Offer if this Agreement has been terminated either with
respect to France or with respect to all Parties pursuant to Article 8.
2.2 Each Party agrees that it will notify the other Parties forthwith after
any of its Executive Officers become aware that (i) the conditions set out in
Part A of Schedule 2 have been satisfied or waived or have become incapable of
satisfaction, (ii) the conditions set out in Part B of Schedule 2 have been
satisfied or waived or have become incapable of satisfaction or (iii) a Material
Adverse Effect has occurred or is reasonably likely to occur with respect to
such Party, such notification to indicate in reasonable detail the nature and
effect thereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF FRANCE. Except as set forth in the
disclosure letter dated the date hereof delivered to Canada and Switzerland by
France (the FRANCE DISCLOSURE LETTER), France hereby represents and warrants to
Canada and Switzerland that:
3.1.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of France and its
Material Subsidiaries has been duly organized and is validly existing as a
corporation, and to the extent relevant under the applicable corporate law, in
good standing, under the laws of its respective jurisdiction of organization and
has all requisite corporate or similar power and authority to own and operate
its properties and assets and to carry on its business as presently conducted
and is in good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its properties or conduct of its business requires
such standing, except where the failure to be in good standing would not,
individually or in the aggregate, be reasonably likely to have a France Material
Adverse Effect. France has made available to Canada and Switzerland a complete
and correct copy of France's and its Material Subsidiaries' articles of
association and by-laws, or other comparable governing instruments, each as
amended to date. France's and its Material Subsidiaries' articles of
association, by-laws and other comparable governing instruments as so made
available are in full force and effect.
As used in this Agreement, the term (A) SUBSIDIARY means, with respect to
any Party, any entity, of which at least a majority of the securities or
ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
is directly or indirectly beneficially owned or controlled by such Party or by
one or more of its respective Subsidiaries or by such Party and any one or more
of its respective Subsidiaries, and (B) MATERIAL SUBSIDIARY means any Subsidiary
constituting more than (i) 5% of the relevant Group's total assets or
shareholder's equity at the end of the fiscal year ended December 31, 1998, or
(ii) 10% of the relevant Group's total net income for the fiscal year ended
December 31, 1998; (C) FRANCE MATERIAL ADVERSE EFFECT means a material adverse
effect on the financial condition, properties, business or results of operations
of the France Group; except for any such effect resulting from any change in
economic or business conditions generally, or with respect to the aluminum or
packaging industries specifically and (D) FRANCE GROUP means France, its
Subsidiaries and its interests in associated entities taken as a whole.
3.1.2 CAPITAL STRUCTURE. The authorized capital stock of France consists of
80,469,343 French Ordinary Shares and an additional number of French Ordinary
Shares with a maximum nominal value (excluding any insurance premium) of
490,000,000 euros, provided that this maximum nominal value is reduced to
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245,000,000 euros unless existing holders of French Ordinary Shares are afforded
pre-emptive rights, and 1,091,044 French Preferred Shares, of which 80,469,343
French Ordinary Shares (which includes the French Shares referred to in Article
4.2.4) and 1,091,044 French Preferred Shares were outstanding as of the close of
business on August 6, 1999. All of the outstanding French Shares have been duly
authorized and are validly issued and fully paid and there is no liability on
the part of the holders to pay any further amount in respect of any French
Share. France has no French Shares reserved for issuance, except that, as of
August 6, 1999, there were up to 2,835,000 French Ordinary Shares authorized for
issuance pursuant to options that have been granted or are eligible to be
granted by France to the officers and employees of France and its Subsidiaries,
of which 1,606,000 French Ordinary Shares were reserved for issuance pursuant to
options that have been granted by France to officers and employees of France and
its Subsidiaries. Each of the outstanding shares of capital stock or other
securities of each of France's Subsidiaries is duly authorized, validly issued
and fully paid and there is no liability on the part of the holders to pay any
further amount in respect of any French Share and, except for directors'
qualifying shares, and except as provided in the French Reports filed prior to
the date hereof, is owned by France or a direct or indirect wholly-owned
Subsidiary of France, free and clear of any lien, pledge, security interest,
claim or other encumbrance. Except as set forth above, there are no preemptive
or other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of France or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
person or entity a right to subscribe for or acquire, any securities of France
or any of its Subsidiaries, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. France does not have outstanding
any bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of France on any matter.
3.1.3 AUTHORITY RELATIVE TO THIS AGREEMENT AND APPROVAL. (A) France has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement. This Agreement is a legal, valid and binding agreement of France
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (the BANKRUPTCY AND EQUITY EXCEPTION).
(B) The Board of Directors of France has approved this Agreement, the
Combination, the French Exchange Offer and the other transactions contemplated
hereby to which it will be a party and, concurrently with the execution of this
Agreement has resolved to recommend to its shareholders to accept the French
Exchange Offer regardless of whether or not the Swiss Exchange Offer is
consummated.
3.1.4 GOVERNMENTAL FILINGS; NO VIOLATIONS. (A) Other than the filings,
approvals and/or notices required to be made (i) under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the HSR ACT), the Investment
Canada Act (INVESTMENT CANADA ACT), the Canadian Competition Act (the CANADIAN
COMPETITION ACT), EC Council Regulation 4064/89 (the EC ANTITRUST ACT), and such
other filings as may be required by the antitrust or competition laws, rules or
regulations of the United States, the European Union, Canada, France,
Switzerland and any other applicable jurisdiction (such laws, rules and
regulations together with the HSR Act, the EC Antitrust Act, the Canadian
Competition Act and Investment Canada Act are referred to as the ANTITRUST
LAWS), (ii) under the United States Securities Exchange Act of 1934, as amended
(the EXCHANGE ACT), the United States Securities Act of 1933, as amended (the
SECURITIES ACT), local securities or "blue-sky" laws, takeover, company or
securities laws, rules or regulations of the United States, Canada, Switzerland,
France (including the regulations of the Conseil des Marches Financiers (CMF),
the Commission des Operations de Bourse (COB), the ParisBourse-SBF (SBF)), the
European Union and any other applicable jurisdiction (all such laws, rules and
regulations, together with the Exchange Act and the Securities Act, are referred
to as the SECURITIES LAWS), (iii) under any stock exchange rules or regulations
in the United States, Canada, Switzerland, France, the European Union and any
other applicable jurisdiction and (iv) to the French Ministere de l'Economie,
des Finances et de l'Industrie under regulations for foreign investment in
France, no notices, reports or other filings are required to be made by France
with, nor are any consents, registrations,
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approvals, permits or authorizations required to be obtained by France from, any
governmental or regulatory authority, agency, commission, body or other
governmental entity (GOVERNMENTAL ENTITY), in connection with the execution and
delivery of this Agreement by France and the consummation of the Combination,
the French Exchange Offer and the other transactions contemplated by this
Agreement to which France will be a party, except those that the failure to make
or obtain would not, individually or in the aggregate, be reasonably likely to
have a France Material Adverse Effect or to prevent, materially delay or
materially impair the ability of France to consummate the Combination.
(B) The execution, delivery and performance of this Agreement by France do not,
and the consummation by France of the Combination and the other transactions
contemplated hereby to which France will be a party will not (i) constitute or
result in (I) a breach or violation of, or a default under, the articles of
association or by-laws or the comparable governing instruments of France or any
of its Material Subsidiaries, (II) a breach or violation of, or a default under,
the acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on or rights in respect of the assets of France or
any of its Subsidiaries (with or without notice, lapse of time or both) pursuant
to, any agreement, lease, contract, note, mortgage, indenture, arrangement or
other obligation (CONTRACTS) binding upon France or any of its Subsidiaries or
any Law or governmental or non-governmental permit or license to which France or
any of its Subsidiaries is subject or (III) any change in the rights or
obligations of any party under any of the Contracts to which France or any of
its Subsidiaries is a party or (ii) require the consent of any counterparty to
any of the Contracts to which France or any of its Subsidiaries is a party,
except, in the case of sub-clauses (II) and (III) of clause (i), for any breach,
violation, default, acceleration, creation, change or, in the case of clause
(ii), any consent that in each case would not, individually or in the aggregate,
be reasonably likely to have a France Material Adverse Effect or prevent,
materially delay or materially impair the ability of France to consummate the
transactions contemplated by this Agreement to which it will be a party.
3.1.5 FRENCH REPORTS; FINANCIAL STATEMENTS. France has made available to each
of Canada and Switzerland each annual report, registration statement, report,
proxy statement or information statement prepared by it since December 31, 1998
(the AUDIT DATE), each in the form (including exhibits, annexes and any
amendments thereto) filed with or provided to the COB or the United States
Securities and Exchange Commission (SEC) (collectively, including any such
reports filed subsequent to the date hereof and as amended, the FRENCH REPORTS).
As of their respective dates (or, if amended, as of the date of such amendment),
the French Reports were, and any French Reports filed with the COB or the SEC
subsequent to the date hereof will be, true, complete and correct in all
material respects and comply with applicable legal requirements. Each of the
consolidated balance sheets included in or incorporated by reference into the
French Reports (including the related notes and schedules) fairly presents, or
will fairly present, in all material respects the consolidated financial
position of France and its Subsidiaries as of its date and each of the
consolidated statements of income and of cash flows included in or incorporated
by reference into the French Reports (including any related notes and schedules)
fairly presents, or will fairly present, the results of operations, retained
earnings and cash flows, as the case may be, of France and its Subsidiaries on a
consolidated basis for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in accordance with the
generally accepted accounting principles of France (FRENCH GAAP) or generally
accepted accounting principles of the United States, as applicable, consistently
applied during the periods involved, except as may be noted therein.
3.1.6 ABSENCE OF CERTAIN CHANGES. Except as fairly disclosed in the French
Reports filed prior to the date of the Initial Combination Agreement and except
as contemplated hereby, since the Audit Date and through the date of the Initial
Combination Agreement, France and its Subsidiaries have conducted their
respective businesses only in, and have not engaged in any material transaction
other than according to, the ordinary course of such businesses and there has
not been (i) any change in the financial condition, properties, business or
results of operations of France and its Subsidiaries or any development or
combination of developments of which the Executive Officers of France have
knowledge that has had or would be, individually or in the aggregate, reasonably
likely to have a France Material Adverse Effect; (ii) any damage, destruction or
other casualty loss with respect to the assets or property owned, leased or
otherwise used by France or any of its Subsidiaries, whether or not covered by
insurance, other than
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any damage, destruction or other casualty loss that would not, individually or
in the aggregate, be reasonably likely to have a France Material Adverse Effect;
(iii) any declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of France or its Subsidiaries,
except for dividends or other distributions on its capital stock publicly
announced prior to the date hereof or made by a wholly owned Subsidiary of
France; or (iv) any change by France in accounting principles, practices or
methods. Since the Audit Date, except as provided for herein or as disclosed in
the French Reports filed prior to the date hereof, there has not been any
increase in the compensation payable or that could become payable by France or
any of its Subsidiaries to officers or key employees or any amendment of any of
the Compensation and Benefit Plans of France other than increases or amendments
in the ordinary course of business consistent with past practice.
As used in this Agreement, the term (i) EXECUTIVE OFFICER means with
respect to France: its Chairman and Chief Executive Officer, Chief Financial
Officer, Chief Legal Officer and Senior Vice President - Corporate Finance and
their successors; Switzerland: its Chief Executive Officer, Chief Legal Officer,
Executive Vice President - Corporate Development and their successors; and
Canada: Chief Executive Officer, Chief Financial Officer, Chief Legal Officer
and its Executive Vice President - Corporate Development and their successors
and (ii) KNOWLEDGE with respect to a particular person shall mean such person's
actual knowledge.
3.1.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the French
Reports filed prior to the date of the Initial Combination Agreement, as of the
date hereof there are no obligations or liabilities, including, in respect of
obligations and liabilities disclosed in any French Report, any change in those
obligations or liabilities, whether or not accrued, contingent or otherwise and
whether or not required to be disclosed, including those relating to matters
involving any Environmental Law, or any other facts or circumstances of which
the Executive Officers of France have knowledge that would be reasonably likely
to result in any claims against, or obligations or liabilities of, France or any
of its Subsidiaries, except for those that would not be reasonably likely to
have a France Material Adverse Effect or prevent or materially delay or
materially impair the ability of France to consummate the transactions
contemplated by this Agreement to which it will be a party.
As used in this agreement, (i) the term AFFILIATE means with respect to a
specified person or entity, a person or entity which directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with the person or entity specified; (ii) the term ENVIRONMENTAL
LAW means any United States, French, Swiss, Canadian, European Union or other
relevant jurisdiction's statute, law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health, safety, or
natural resources, (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, indoor air,
employee exposure, wetlands, pollution, contamination or any injury or threat of
injury to persons or property relating to any Hazardous Substance; and (iii) the
term HAZARDOUS SUBSTANCE means: (A) any substance that is listed, classified or
regulated pursuant to any Environmental Law; (B) any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive material or radon; and (C) any other
substance which may be the subject of regulatory action by any Governmental
Entity in connection with any Environmental Law.
3.1.8 COMPLIANCE WITH LAWS; PERMITS. Except as set forth in the French Reports
filed prior to the date of the Initial Combination Agreement, the businesses of
each of France and its Material Subsidiaries have not been, and are not being,
conducted in violation of any federal, state, local or foreign law, statute,
ordinance, rule, regulation, judgment, order, injunction, decree, arbitration
award, agency requirement, license or permit of any Governmental Entity
(collectively, LAWS), except for violations or possible violations that would
not, individually or in the aggregate, be reasonably likely to have a France
Material Adverse Effect or prevent or materially delay or materially impair the
ability of France to consummate the transactions contemplated by this Agreement
to which it will be a party. Except as set forth in the French Reports filed
prior to the date of the Initial Combination Agreement, no investigation or
review by any Governmental Entity with respect to France or any of its
Subsidiaries is pending or, to the knowledge of the Executive Officers of
France, threatened, nor has any Governmental Entity indicated to France an
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intention to conduct the same, except for those the outcome of which would not,
individually or in the aggregate, be reasonably likely to have a France Material
Adverse Effect or prevent or materially delay or materially impair the ability
of France to consummate the transactions contemplated by this Agreement to which
it will be a party. To the knowledge of the Executive Officers of France, no
material change is required in France's or any of its Subsidiaries' processes,
properties or procedures in connection with any such Laws, except those that,
individually or in the aggregate, would not be reasonably likely to have a
France Material Adverse Effect, and, as of the date hereof, France has not
received any notice or communication of any material noncompliance with any such
Laws that has not been cured as of the date hereof. France and its Subsidiaries
each has all permits, licenses, franchises, variances, exemptions, orders and
other governmental authorizations, consents and approvals necessary to conduct
its business as presently conducted except those the absence of which would not,
individually or in the aggregate, be reasonably likely to have a France Material
Adverse Effect or prevent or materially delay or materially impair the ability
of France to consummate the transactions contemplated by this Agreement to which
it will be a party.
3.1.9 TAX MATTERS; ACCOUNTING. (a) As of the date hereof, neither France nor
any of its Subsidiaries has taken or agreed to take any action, nor do the
Executive Officers of France have any knowledge of any fact or circumstance
relating to France, that would be reasonably likely to prevent the business
combination resulting from the consummation of both of the Exchange Offers from
being accounted for as a "pooling-of-interests" under Canadian GAAP if, in the
absence of such action, such accounting treatment of such business combination
would not have been so prevented.
(b) As of the date hereof, neither France nor any of its Subsidiaries has
taken or agreed to take any action, nor do the Executive Officers of France have
any knowledge of any fact or circumstance relating to France, that would be
reasonably likely to prevent the Exchange Offers contemplated by this Agreement
from qualifying as tax-free transactions to Canada, France, Switzerland and the
shareholders of Canada and to the shareholders of France and Switzerland who are
resident for tax purposes in France, Switzerland and the United States (other
than a corporation holding Swiss Shares with a value in excess of CFH 2 million)
to the extent such shareholders exchange Swiss Shares and French Shares,
respectively, for Canada Common Shares unless, in the absence of such action the
Exchange Offers would have failed to so qualify.
3.1.10 BROKERS AND FINDERS. Neither France nor any of its officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with the Combination
or the other transactions contemplated in this Agreement, except that France has
employed Credit Suisse First Boston Limited and Rothschilds et Cie as its
financial advisors.
3.1.11 The formation and initial public offering of American National Can Group,
Inc. (ANC) has been consummated in accordance with the description set forth in
the registration statement, as declared effective by the SEC, pursuant to which
the common stock of ANC was offered for sale.
3.1.12 KNOWLEDGE OF BREACHES. France does not have knowledge that any
representation and warranty made by either Canada or Switzerland under this
Article 3 is not true and correct in any material respect.
3.2 REPRESENTATIONS AND WARRANTIES OF SWITZERLAND. Except as set forth in
the disclosure letter dated the date of the Initial Combination Agreement,
delivered to Canada and France by Switzerland (the SWITZERLAND DISCLOSURE
LETTER), Switzerland hereby represents and warrants to Canada and France that:
3.2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of Switzerland and
its Material Subsidiaries has been duly organized and is validly existing as a
corporation, and to the extent relevant under the applicable corporate law,
under the laws of its respective jurisdiction of organization and has all
requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
in good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its properties or conduct of its business requires
such standing, except where the failure to be in good standing would not,
individually or in the aggregate, be reasonably likely to have a Swiss Material
Adverse Effect. Switzerland has made available to Canada and France a complete
and correct copy of Switzerland's articles of association and by-laws, or other
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comparable governing instruments each as amended to date. Switzerland's articles
of association, by-laws and other comparable governing instruments as so made
available are in full force and effect.
As used in this Agreement, the term (A) SWISS MATERIAL ADVERSE EFFECT means
a material adverse effect on the financial condition, properties, business or
results of operations of the Switzerland Group except for any such effect
resulting from any change in economic or business conditions generally, or with
respect to the aluminum or packaging industries specifically and (B) SWITZERLAND
GROUP means Switzerland, its Subsidiaries and its interests in associated
entities taken as a whole (the terms "Subsidiary" and Switzerland Group" shall
for purposes of this Agreement exclude any of the entities that are intended to
be the subject of the Chemicals Division Demerger (as defined below)).
3.2.2 CAPITAL STRUCTURE. Switzerland has pursuant to its articles of
association 6,286,126 Swiss Shares which are issued as well as a conditional
capital for a maximum of 551,575 additional shares as of the close of business
on August 6, 1999. As of August 6, 1999, up to a further 325,945 Swiss Shares
would be issued under the conditional capital in connection with the exercise of
conversion or option rights relating to the convertible bonds of Switzerland
assuming the exercise of such rights. All issued Swiss Shares are validly
issued, fully paid up and outstanding. Each of the outstanding shares of capital
stock or other securities of each of Switzerland's Subsidiaries is duly
authorized, validly issued, fully paid and non-assessable and, except for
directors' qualifying shares, and except as provided in the Swiss Reports filed
prior to the date hereof, is owned by Switzerland or a direct or indirect
wholly-owned Subsidiary of Switzerland, free and clear of any lien, pledge,
security interest, claim or other encumbrance. There are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or other securities of
Switzerland or any of its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any person or
entity a right to subscribe for or acquire, any securities of Switzerland or any
of its Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. Except for the securities specified above,
Switzerland does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders of
Switzerland on any matter.
3.2.3 AUTHORITY RELATIVE TO THIS AGREEMENT AND APPROVAL. (A) Switzerland has
all requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement. This Agreement is a legal, valid and binding agreement of Switzerland
enforceable against it in accordance with its terms, subject to the Bankruptcy
and Equity Exception.
(B) The Switzerland Board of Directors has unanimously approved this Agreement,
the Combination and the Swiss Exchange Offer and the other transactions
contemplated hereby to which it would be a party and the recommendation to its
shareholders to accept the Swiss Exchange Offer (regardless of whether or not
the French Exchange Offer is consummated) and to approve the Chemicals Division
Demerger and to adopt a clause in the Articles of Association of Switzerland
whereby the Swiss tender offer rules requiring a mandatory bid shall not apply
to the Swiss Exchange Offer (OPT-OUT).
3.2.4 GOVERNMENTAL FILINGS; NO VIOLATIONS. (A) Other than the filings,
approvals and/or notices required to be made (i) under the Antitrust Laws,
(ii) under the Securities Laws, (iii) under any stock exchange rules or
regulations in the United States, Canada, Switzerland, France, the European
Union and any other applicable jurisdiction and (iv) required to comply with
statutes of Switzerland relating to the acquisition of land by foreigners, no
notices, reports or other filings are required to be made by Switzerland with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by Switzerland from any Governmental Entity, in
connection with the execution and delivery of this Agreement by Switzerland and
the consummation by Switzerland of the Combination, the Swiss Exchange Offer and
the other transactions contemplated hereby to which Switzerland will be a party,
except those that the failure to make or obtain would not, individually or in
the aggregate, be reasonably likely to have a Swiss Material Adverse Effect or
prevent, materially delay or materially impair the ability of Switzerland to
consummate the Combination.
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(B) The execution, delivery and performance of this Agreement by Switzerland do
not, and the consummation by Switzerland of the Combination, the Swiss Exchange
Offer and the other transactions contemplated hereby to which Switzerland will
be a party will not (i) constitute or result in (I) a breach or violation of, or
a default under, the articles of association or by-laws or the comparable
governing instruments of Switzerland or any of its Subsidiaries, (II) a breach
or violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on or rights
in respect of the assets of Switzerland or any of its Subsidiaries (with or
without notice, lapse of time or both) pursuant to, any Contract binding upon
Switzerland or any of its Subsidiaries or any Law or governmental or
non-governmental permit or license to which Switzerland or any of its
Subsidiaries is subject or (III) any change in the rights or obligations of any
party under any of the Contracts to which Switzerland or any of its Subsidiaries
is a party, or (ii) require the consent of any counterparty to any of the
Contracts to which Switzerland or any of its Subsidiaries is a party, except, in
the case of sub-clause (II) or (III) of clause (i) above, for any breach,
violation, default, acceleration, creation or change or, in the case of clause
(ii) above any consent, that in each case would not, individually or in the
aggregate, be reasonably likely to have a Swiss Material Adverse Effect or
prevent, materially delay or materially impair the ability of Switzerland to
consummate the transactions contemplated by this Agreement to which it will be a
party.
3.2.5 SWISS REPORTS; FINANCIAL STATEMENTS. Switzerland has made available to
each of Canada and France each registration statement, proxy statement, annual
report and information statement, and other documents provided by Switzerland to
the Swiss Exchange (SWX) and prepared by it since the Audit Date, each in the
form (including exhibits, annexes and any amendments thereto) provided to the
SWX (collectively, including any such reports provided subsequent to the date
hereof and as amended, the SWISS REPORTS). As of their respective dates, (or, if
amended, as of the date of such amendment) the Swiss Reports were, and any Swiss
Reports provided to the SWX subsequent to the date hereof will be true, complete
and correct in all material respects and comply with applicable legal
requirements. Each of the consolidated balance sheets included in or
incorporated by reference into the Swiss Reports (including the related notes
and schedules) fairly presents, or will fairly present, in all material
respects, the consolidated financial position of Switzerland and its
Subsidiaries as of its date and each of the consolidated statements of income
and of cash flows included in or incorporated by reference into the Switzerland
Reports (including any related notes and schedules) fairly presents, or will
fairly present, the results of operations, retained earnings and cash flows, as
the case may be, of Switzerland and its Subsidiaries on a consolidated basis for
the periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in amount
or effect), in each case in accordance with International Accounting Standards
consistently applied during the periods involved, except as may be noted
therein.
3.2.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Swiss Reports
provided to the SWX prior to the date of the Initial Combination Agreement and
except as contemplated hereby, since the Audit Date and through the date of the
Initial Combination Agreement, Switzerland and its Subsidiaries have conducted
their respective businesses only in, and have not engaged in any material
transaction other than according to, the ordinary course of such businesses and
there has not been (i) any change in the financial condition, properties,
business or results of operations of Switzerland and its Subsidiaries or any
development or combination of developments of which the Executive Officers of
Switzerland have knowledge that has had or would be, individually or in the
aggregate, reasonably likely to have a Swiss Material Adverse Effect; (ii) any
damage, destruction or other casualty loss with respect to any asset or property
owned, leased or otherwise used by Switzerland or any of its Subsidiaries,
whether or not covered by insurance, other than any damage, destruction or other
casualty loss that would not, individually or in the aggregate, be reasonably
likely to have a Swiss Material Adverse Effect; (iii) any declaration, setting
aside or payment of any dividend or other distribution in respect of the capital
stock of Switzerland, except for dividends or other distributions on its capital
stock publicly announced prior to the date hereof, the Chemicals Division
Demerger and other than dividends and distributions made by a wholly owned
Subsidiary of Switzerland to Switzerland or a company that will be a wholly
owned Subsidiary of Switzerland after the Chemicals Division Demerger; or
(iv) any change by Switzerland in accounting principles, practices or methods.
Since the Audit Date, except as provided for herein or as
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disclosed in the Swiss Reports filed prior to the date hereof, there has not
been any increase in the compensation payable or that could become payable by
Switzerland or any of its Subsidiaries to officers or key employees or any
amendment of any of the Compensation and Benefit Plans of Switzerland other than
increases or amendments in the ordinary course of business consistent with past
practice.
3.2.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the Swiss
Reports provided to the SWX prior to the date of the Initial Combination
Agreement, as of the date hereof there are no obligations or liabilities,
including in respect of obligations and liabilities disclosed in any Swiss
Report, any change in those obligations or liabilities whether or not accrued,
contingent or otherwise and whether or not required to be disclosed, including
those relating to matters involving any Environmental Law, or any other facts or
circumstances of which the Executive Officers of Switzerland have knowledge that
would be reasonably likely to result in any claims against, or obligations or
liabilities of, Switzerland or any of its Subsidiaries, except for those that
would not, individually or in the aggregate, be reasonably likely to have a
Swiss Material Adverse Effect or prevent or materially delay or materially
impair the ability of Switzerland to consummate the transactions contemplated by
this Agreement to which it will be a party.
3.2.8 COMPLIANCE WITH LAWS; PERMITS. Except as set forth in the Swiss Reports
provided to the SWX prior to the date of the Initial Combination Agreement, the
businesses of each of Switzerland and its Material Subsidiaries have not been,
and are not being, conducted in violation of any Laws, except for violations or
possible violations that would not, individually or in the aggregate, be
reasonably likely to have a Swiss Material Adverse Effect or prevent or
materially delay or materially impair the ability of Switzerland to consummate
the transactions contemplated by this Agreement to which it will be a party.
Except as set forth in the Swiss Reports provided to the SWX prior to the date
of the Initial Combination Agreement, no investigation or review by any
Governmental Entity with respect to Switzerland or any of its Subsidiaries is
pending or, to the knowledge of the Executive Officers of Switzerland,
threatened, nor has any Governmental Entity indicated to Switzerland an
intention to conduct the same, except for those the outcome of which would not,
individually or in the aggregate, be reasonably likely to have a Swiss Material
Adverse Effect or prevent or materially delay or materially impair the ability
of Switzerland to consummate the transactions contemplated by this Agreement to
which it will be a party. To the knowledge of the Executive Officers of
Switzerland, no material change is required in Switzerland's or any of its
Subsidiaries' processes, properties or procedures in connection with any such
Laws, except those that, individually or in the aggregate, would not be
reasonably likely to have a Swiss Material Adverse Effect, and, as of the date
hereof, Switzerland has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date hereof.
Switzerland and its Subsidiaries each has all permits, licenses, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct its business as presently conducted except
those the absence of which would not, individually or in the aggregate, be
reasonably likely to have a Swiss Material Adverse Effect or prevent or
materially delay or materially impair the ability of Switzerland to consummate
the transactions contemplated by this Agreement to which it will be a party.
3.2.9 TAX MATTERS; ACCOUNTING. (a) As of the date hereof, neither Switzerland
nor any of its Subsidiaries has taken or agreed to take any action, nor do the
Executive Officers of Switzerland have any knowledge of any fact or circumstance
relating to Switzerland, that would be reasonably likely to prevent the business
combination resulting from the consummation of both of the Exchange Offers from
being accounted for as a "pooling-of-interests" under Canadian GAAP if, in the
absence of such action, such accounting treatment of such business combination
would not have been so prevented.
(b) As of the date hereof, neither Switzerland nor any of its Subsidiaries has
taken or agreed to take any action, nor do the Executive Officers of Switzerland
have any knowledge of any fact or circumstance relating to Switzerland, that
would be reasonably likely to prevent the Exchange Offers contemplated by this
Agreement from qualifying as tax-free transactions to Canada, France,
Switzerland and the shareholders of Canada and to the shareholders of France or
Switzerland who are resident for tax purposes in France, Switzerland and the
United States (other than a corporation holding Swiss Shares with a value in
excess of CHF 2 million) to the extent such shareholders exchange Swiss Shares
and
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12
French Shares, respectively, for Canada Common Shares unless, in the absence of
such action, the Exchange Offers would have failed to so qualify.
3.2.10 BROKERS AND FINDERS. Neither Switzerland nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
the Combination or the other transactions contemplated by this Agreement, except
that Switzerland has employed Xxxxxxx Xxxxx International as its financial
advisors.
3.2.11 KNOWLEDGE OF BREACHES. Switzerland does not have knowledge that any
representation and warranty made by either Canada or France under this Article 3
is not true and correct in any material respect.
3.3 REPRESENTATIONS AND WARRANTIES OF CANADA. Except as set forth in the
disclosure letter dated the date of the Initial Combination Agreement delivered
to France and Switzerland by Canada (the CANADA DISCLOSURE LETTER), Canada
hereby represents and warrants to France and Switzerland that:
3.3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of Canada and its
Subsidiaries has been duly organized and is validly existing as a corporation,
and to the extent relevant under the applicable corporate law, under the laws of
its respective jurisdiction of organization and has all requisite corporate or
similar power and authority to own and operate its properties and assets and to
carry on its business as presently conducted and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such standing, except where the
failure to be in good standing would not, individually or in the aggregate, be
reasonably likely to have a Canada Material Adverse Effect (as defined below).
Canada has made available to France and Switzerland a complete and correct copy
of Canada's and its Material Subsidiaries' articles of incorporation and
by-laws, or other comparable governing instruments each as amended to date.
Canada's and its Material Subsidiaries' articles of incorporation, by-laws and
other comparable governing instruments as so made available are in full force
and effect.
As used in this Agreement, the term (A) CANADA MATERIAL ADVERSE EFFECT
means a material adverse effect on the financial condition, properties, business
or results of operations of Canada and its Subsidiaries taken as a whole except
for any such effect resulting from any change in economic or business conditions
generally or with respect to the aluminum or packaging industries specifically
and (B) CANADA GROUP means Canada and its Subsidiaries and its interests in
associated entities taken as a whole.
3.3.2 CAPITAL STRUCTURE. The authorized capital stock of Canada consists of an
unlimited number of Canada Common Shares, an unlimited number of shares of
Preferred Stock, of which 217,647,557 Canada Common Shares, 4,200,000 shares of
Series C Preferred Stock of Canada, 1,500,000 shares of Series C (1985)
Preferred Stock of Canada and 3,000,000 shares of Series E Preferred Stock of
Canada were outstanding as of the close of business on August 6, 1999. All of
the outstanding Canada Common Shares have been duly authorized and are validly
issued, fully paid and nonassessable. Canada has no shares reserved for
issuance, except that, as of August 6, 1999, there were 18,960,088 Canada Common
Shares reserved for issuance pursuant to Canada's Executive Share Option Plan
(the CANADA STOCK PLANS) and 524,934 Canada Common Shares reserved for issuance
pursuant to Canada's dividend reinvestment plan and the Share Purchase Plan of
Canada. Each of the outstanding shares of capital stock or other securities of
each of Canada's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and, except for directors' qualifying shares and except as
provided in the Canada Reports filed prior to the date hereof, is owned by
Canada or a direct or indirect wholly-owned Subsidiary of Canada, free and clear
of any lien, pledge, security interest, claim or other encumbrance. Except as
set forth above, there are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements or commitments to issue or sell any
shares of capital stock or other securities of Canada or any of its Subsidiaries
or any securities or obligations convertible or exchangeable into or exercisable
for, or giving any person or entity a right to subscribe for or acquire, any
securities of Canada or any of its Subsidiaries, and no securities or
obligations evidencing such rights are authorized, issued or outstanding. Canada
does not have outstanding any bonds, debentures, notes or other obligations the
holders of which have
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the right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of Canada on any matter.
3.3.3 AUTHORITY RELATIVE TO THIS AGREEMENT AND APPROVAL. (A) Canada has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement except for the approval of the issuance of Canada Common Shares to be
issued pursuant to the Exchange Offers by a majority of the votes cast by the
holders of Canada Common Shares (the REQUISITE VOTE) at a duly held meeting of
the stockholders of Canada and except for the approval by two-thirds of the
votes cast by the holders of Canada Common Shares of the exporting of Canada's
incorporation to the extent required pursuant to Schedule 3. This Agreement is a
legal, valid and binding agreement of Canada enforceable against it in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
(B) The Canada Board of Directors has unanimously approved this Agreement, the
Combination and the Exchange Offers and the other transactions contemplated
hereby to which it will be a party and approved the recommendations to its
shareholders to approve (i) the issuance of Canada Common Shares in connection
with the French Exchange Offer (regardless of whether or not the Swiss Exchange
Offer is consummated), (ii) the issuance of Canada Common Shares in connection
with the Swiss Exchange Offer (regardless of whether or not the French Exchange
Offer is consummated) and (iii) the exporting of Canada's incorporation, if
required.
3.3.4 GOVERNMENTAL FILINGS; NO VIOLATIONS. (A) Other than the filings,
approvals and/or notices required to be made (i) under the Antitrust Laws,
(ii) under the Securities Laws, (iii) under any stock exchange rules or
regulations in the United States, Canada, Switzerland, France, the European
Union and any other applicable jurisdiction, (iv) with the French Ministere de
l'Economie, des Finances et de l'Industrie under regulations for foreign
investment in France, and (v) to comply with statutes of Switzerland relating to
the acquisition of land by foreigners, no notices, reports or other filings are
required to be made by Canada with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Canada from, any
Governmental Entity in connection with the execution and delivery of this
Agreement by Canada and the consummation by Canada of the Combination, the
Exchange Offers and the other transactions contemplated hereby, to which Canada
will be a party except those that the failure to make or obtain would not,
individually or in the aggregate, be reasonably likely to have a Canada Material
Adverse Effect or prevent, materially delay or materially impair the ability of
Canada to consummate the Combination.
(B) The execution, delivery and performance of this Agreement by Canada do not,
and the consummation by Canada of the Combination, the Exchange Offers and the
other transactions contemplated hereby to which Canada will be a party will not
(i) constitute or result in (I) a breach or violation of, or a default under the
articles of incorporation or by-laws or the comparable governing instruments of
Canada or any of its Subsidiaries, (II) a breach or violation of, or a default
under, the acceleration of any obligations or the creation of a lien, pledge,
security interest or other encumbrance on or rights in respect of the assets of
Canada or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any Contract binding upon Canada or any of its Subsidiaries
or any Law or governmental or non-governmental permit or license to which Canada
or any of its Subsidiaries is subject or (III) any change in the rights or
obligations of any party under any of the Contracts to which Canada or any of
its Subsidiaries is a party or (ii) require the consent of any counterparty to
any of the Contracts to which Canada or any of its Subsidiaries is a party,
except, in the case of sub-clause (II) or (III) of clause (i) above, for any
breach, violation, default, acceleration, creation or change or in the case of
clause (ii) above, for any consent that in each case would not, individually or
in the aggregate, be reasonably likely to have a Canada Material Adverse Effect
or prevent, materially delay or materially impair the ability of Canada to
consummate the transactions contemplated hereby to which it will be a party.
3.3.5 CANADA REPORTS; FINANCIAL STATEMENTS. Canada has made available to each
of France and Switzerland each management information circular, registration
statement, prospectus, report, annual information form, proxy statement or
information statement prepared by it since the Audit Date, each in the form
(including exhibits, annexes and any amendments thereto) filed with the Ontario
Securities Commission (the OSC) and the SEC (collectively, including any such
reports filed subsequent to the date
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hereof and as amended, the CANADA REPORTS). As of their respective dates, (or,
if amended, as of the date of such amendment) the Canada Reports were, and any
Canada Reports filed with the OSC or the SEC subsequent to the date hereof will
be, true, complete and correct in all material respects and comply with all
applicable legal requirements. Each of the consolidated balance sheets included
in or incorporated by reference into the Canada Reports (including the related
notes and schedules) fairly presents, or will fairly present, in all material
respects, the consolidated financial position of Canada and its Subsidiaries as
of its date and each of the consolidated statements of income and of cash flows
included in or incorporated by reference into the Canada Reports (including any
related notes and schedules) fairly presents, or will fairly present, the
results of operations, retained earnings and cash flows, as the case may be, of
Canada and its Subsidiaries on a consolidated basis for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with Canadian GAAP consistently applied during the
periods involved, except as may be noted therein.
3.3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Canada Reports
filed prior to the date of the Initial Combination Agreement and except as
contemplated hereby, since the Audit Date and through the date of the Initial
Combination Agreement, Canada and its Subsidiaries have conducted their
respective businesses only in, and have not engaged in any material transaction
other than according to, the ordinary course of such businesses and there has
not been (i) any change in the financial condition, properties, business or
results of operations of Canada and its Subsidiaries or any development or
combination of developments of which the Executive Officers of Canada have
knowledge that has had or would be, individually or in aggregate, reasonably
likely to have a Canada Material Adverse Effect; (ii) any damage, destruction or
other casualty loss with respect to any assets or property owned, leased or
otherwise used by Canada or any of its Subsidiaries, whether or not covered by
insurance, other than any damage, destruction or other casualty loss that would
not, individually or in the aggregate, be reasonably likely to have a Canada
Material Adverse Effect; (iii) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of Canada, except
for dividends or other distributions on its capital stock publicly announced
prior to the date hereof or made by a wholly-owned Subsidiary of Canada; or
(iv) any change by Canada in accounting principles, practices or methods. Since
the Audit Date, except as provided for herein or as disclosed in the Canada
Reports filed prior to the date hereof, there has not been any increase in the
compensation payable or that could become payable by Canada or any of its
Subsidiaries to officers or key employees or any amendment of any of the
Compensation and Benefit Plans of Canada other than increases or amendments in
the ordinary course of business consistent with past practice.
3.3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the Canada
Reports filed prior to the date of the Initial Combination Agreement, as of the
date hereof, there are no obligations or liabilities, including in respect of
obligations and liabilities disclosed in any Canada Report, any change in those
obligations or liabilities whether or not accrued, contingent or otherwise and
whether or not required to be disclosed, including those relating to matters
involving any Environmental Law, or any other facts or circumstances of which
the Executive Officers of Canada have knowledge that would be reasonably likely
to result in any claims against, or obligations or liabilities of, Canada or any
of its Subsidiaries, except for those that would not, individually or in the
aggregate, be reasonably likely to have a Canada Material Adverse Effect or
prevent or materially delay or materially impair the ability of Canada to
consummate the transactions contemplated hereby to which it will be a party.
3.3.8 COMPLIANCE WITH LAWS; PERMITS. Except as set forth in the Canada Reports
filed prior to the date of the Initial Combination Agreement, the businesses of
each of Canada and its Material Subsidiaries have not been, and are not being,
conducted in violation of any Laws, except for violations or possible violations
that would not, individually or in the aggregate, be reasonably likely to have a
Canada Material Adverse Effect or prevent or materially delay or materially
impair the ability of Canada to consummate the transactions contemplated hereby
to which it will be a party. Except as set forth in the Canada Reports filed
prior to the date of the Initial Combination Agreement, no investigation or
review by any Governmental Entity with respect to Canada or any of its
Subsidiaries is pending or, to the knowledge of the Executive Officers of
Canada, threatened, nor has any Governmental Entity indicated an intention to
Canada to conduct the same, except for those the outcome of which would not be
reasonably likely to
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15
have a Canada Material Adverse Effect or prevent or materially delay or
materially impair the ability of Canada to consummate the transactions
contemplated hereby to which it will be a party. To the knowledge of the
Executive Officers of Canada, no material change is required in Canada's or any
of its Subsidiaries' processes, properties or procedures in connection with any
such Laws, except those that, individually or in the aggregate, would not
reasonably likely to have a Canada Material Adverse Effect, and, as of the date
hereof, Canada has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date hereof.
Canada and its Subsidiaries each has all permits, licenses, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct its business as presently conducted except
those the absence of which would not, individually or in the aggregate, be
reasonably likely to have a Canada Material Adverse Effect or prevent or
materially delay or materially impair the ability of Canada to consummate the
transaction contemplated hereby to which it will be a party.
3.3.9 TAX MATTERS; ACCOUNTING. (a) As of the date hereof, neither Canada nor
any of its Subsidiaries has taken or agreed to take any action, nor do the
Executive Officers of Canada have any knowledge of any fact or circumstance
relating to Canada, that would be reasonably likely to prevent the business
combination resulting from the consummation of both of the Exchange Offers from
being accounted for as a "pooling-of-interests" under Canadian GAAP if, in the
absence of such action, such accounting treatment of such business combination
would not have been so prevented.
(b) As of the date hereof, neither Canada nor any of its Subsidiaries has
taken or agreed to take any action, nor do the Executive Officers of Canada have
any knowledge of any fact or circumstance relating to Canada that would be
reasonably likely to prevent the Exchange Offers contemplated by this Agreement
from qualifying as tax-free transactions to Canada, France, Switzerland and the
shareholders of Canada and to the shareholders of France and Switzerland who are
residents for tax purposes in France, Switzerland or the United States (other
than a corporation holding Swiss Shares with a value in excess of CFH 2 million)
to the extent such shareholders exchange Swiss Shares and French Shares,
respectively, for Canada Common Shares unless, in the absence of such action,
the Exchange Offers would have failed to so qualify.
3.3.10 BROKERS AND FINDERS. Neither Canada nor any of its officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with the Combination
or the other transactions contemplated in this Agreement, except that Canada has
employed Xxxxxx Xxxxxxx Xxxx Xxxxxx as its financial advisors.
3.3.11 KNOWLEDGE OF BREACHES. Canada does not have knowledge that any
representation and warranty made by either France or Switzerland under this
Article 3 is not true and correct in any material respect.
ARTICLE 4
COVENANTS OF CANADA, FRANCE AND SWITZERLAND
4.1 COVENANTS BY EACH OF CANADA, FRANCE AND SWITZERLAND TO EACH OF THE OTHERS
4.1.1 The covenants provided in Articles 4.1.2, 4.1.3, 4.1.4, 4.1.5, 4.1.6,
4.1.8 and 4.1.9 shall be effective from the date hereof until the date on which,
(i) with respect to the France Group, Canada has taken up and paid for French
Shares tendered under the French Exchange Offer, (ii) with respect to the
Switzerland Group, Canada has taken up and paid for Swiss Shares tendered under
the Swiss Exchange Offer, (iii) with respect to the Canada Group and its
obligations to France, Canada has taken up and paid for French Shares tendered
under the French Exchange Offer; provided that Article 4.1.5 shall continue to
be effective until the persons (or their replacement designees) proposed by
France to become directors of Canada as specified in Schedule 3 have been
offered the opportunity, and all necessary actions have been taken by Canada to
permit such persons, to become directors of Canada and (iv) with respect to the
Canada Group and its obligations to Switzerland, Canada has taken up and paid
for Swiss Shares tendered under the Swiss Exchange Offer; provided that Article
4.1.5 shall continue to be effective until the persons (or their replacement
designees) proposed by Switzerland to become directors of Canada
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as specified in Schedule 3 have been offered the opportunity, and all necessary
actions have been taken by Canada to permit such persons, to become directors of
Canada.
4.1.2 Each of Canada, France and Switzerland hereby covenants with the other
Parties that it and its directors, officers, employees, agents and other
representatives will:
(a) not, directly or indirectly, take any action to solicit, initiate, assist
or encourage enquiries, submissions, proposals or offers from any other person,
entity or group relating to it, and will not participate in any discussions or
negotiations regarding, or furnish to any person, entity or group any
information with respect to, or otherwise cooperate in any way or assist or
participate in, or facilitate or encourage any effort or attempt with respect
to:
(i) the direct or indirect acquisition or disposition of all or any shares
or any other securities of it or its subsidiaries; or
(ii) any amalgamation, merger, sale of any substantial part of its or any
of its subsidiaries' assets, take-over bid, share exchange, plan of
arrangement, reorganization, joint venture, strategic alliance,
substantial dividend or distribution out of the ordinary course of
business, recapitalisation, liquidation or winding-up of, reverse
take-over or other business combination or similar transaction
involving it or a substantial part of its assets
(except to the extent it would not be precluded from entering into such a
transaction under the terms of Article 4.1.5 and except for the Chemicals
Division Demerger and except as otherwise specifically contemplated
herein).
The foregoing undertaking shall not, however, to the extent required by
applicable laws and regulations (including, without limitation, relevant
fiduciary duties applicable to the Board of Directors), prevent any Party from
entering into discussions with any third party which, not having been
encouraged, enticed or otherwise solicited as aforesaid, makes a written
proposal which constitutes an Alternative Transaction (as defined below).
Notwithstanding the foregoing, no Party will provide information to any third
party about any other Party. Furthermore no Party will provide any information
to any third party about itself unless that third party enters into a
confidentiality and standstill agreement on customary terms which also permits
disclosure to the other Parties concerning the Alternative Transaction. Each of
the Parties agrees that if it has not already done so, it will promptly request
each third party, if any, that has executed a confidentiality agreement within
the 12 months prior to the date hereof with such Party in connection with the
third party's consideration of a proposal which if made would be reasonably
likely to result in an Alternative Transaction to return or destroy all
confidential information furnished to that third party by or on behalf of it or
any of its Subsidiaries.
(b) inform the other Parties forthwith upon becoming aware of an Alternative
Transaction or an unsolicited enquiry, submission, offer or proposal (however
made) described in Article 4.1.2(a) above, including the identity of the person
or entity who has made the proposal and, if an advisor, the identity of the
principal and of any action taken by it pursuant to the last paragraph of
Article 4.1.2(a) and continue to keep each Party informed in relation thereto.
As used in this Agreement, ALTERNATIVE TRANSACTION means an offer or a
proposal made to either France, Switzerland or Canada or some or all of such
companies, as the case may be, in writing and duly authorised by the board of
directors of the person or entity making the offer or proposal (i) to acquire by
means of amalgamation, merger, purchase, exchange or otherwise all of the shares
or all or substantially all of the assets of France, Switzerland or Canada,
(ii) that would be a transaction substantially more favorable to the
shareholders of such Party than the Combination, (iii) except in case of a
transaction involving all or substantially all of the assets of a Party, that is
available to all holders of shares in such Party and (iv) that is reasonably
likely to be consummated taking into account all legal, financial and regulatory
aspects of the proposal.
4.1.3 Notwithstanding the pre-agreement investigation of any of Canada, France
and Switzerland, (each of which, together with its Subsidiaries shall for the
purposes of this Agreement be referred to as the CORPORATION) conducted by or on
behalf of another Party or the other two Parties, upon reasonable notice, and
except as may otherwise be required by applicable law, each of Canada, France
and Switzerland shall (and shall cause each of its Subsidiaries to) afford the
other Corporations' officers,
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employees, counsel, accountants and other authorized representatives
(REPRESENTATIVES) reasonable access, during normal business hours throughout the
period prior to the consummation of the Combination, to its properties, books,
contracts and records and, during such period, each shall furnish promptly to
the other Corporation (if requested by such Corporation) all information
concerning its business, properties and personnel as may reasonably be
requested, provided that no investigation pursuant to this Article 4.1.3 shall
affect or be deemed to modify any representations and warranties made by any
Corporation, and provided, further, that the foregoing shall not require any
Corporation to permit any inspection, or to disclose any information, that in
the reasonable judgment of such Corporation, would result in the disclosure of
any trade secrets of third parties or violate any of its obligations with
respect to confidentiality if such Corporation shall have used commercially
reasonable efforts to obtain the consent of such third party to such inspection
or disclosure and that the foregoing shall not require the Corporation to
violate any attorney-client privilege or violate any law relating to antitrust
or the regulation of markets generally. All requests for information made
pursuant to this Article 4.1.3 shall be directed to an Executive Officer of the
Corporation, or such person as may be designated by any of the Executive
Officers, as the case may be. All such information shall be governed by the
terms of the Confidentiality Agreement.
4.1.4 Each of France, Switzerland and Canada shall notify forthwith both other
Parties upon its Executive Officers becoming aware of any material breach of the
representations and warranties given by it, and of any circumstance reasonably
likely to result in the representations and warranties not being true and
accurate in all material respects if repeated at any time during the currency of
this Agreement (by reference to the facts and circumstances at that time),
including reasonable details of the breach or circumstance and, if remediable,
the means and time frame for anticipated remedy and the applicable Corporation
agrees to, if remediable, use commercially reasonable efforts to remediate.
4.1.5 Except if specifically contemplated herein (including, without limitation,
taking actions permitted under Article 4.1.2) or in the France Disclosure
Letter, the Switzerland Disclosure Letter or the Canada Disclosure Letter,
respectively, each Party agrees that it will not take any action, or refrain
from taking any action, in the operation of its business that is reasonably
likely to be inconsistent with the economic or business fundamentals of either
of the Exchange Offers or materially hinder the consummation of either of the
Exchange Offers. In furtherance thereof, France, Canada and Switzerland
respectively agree (as to it and its Subsidiaries) that it shall not without the
written consent of the other Parties (such consent not to be unreasonably
withheld or delayed):
(a) issue any shares or capital stock (or rights to acquire shares of
capital stock) except pursuant to obligations in effect on the date of
the Initial Combination Agreement, or pursuant to existing employee
stock option or stock purchase plans in amounts and to the extent
consistent with past practice;
(b) repurchase or redeem any shares or capital stock or permit its
Subsidiaries (other than wholly-owned subsidiaries) to repurchase or
redeem any shares or capital stock (or rights to acquire shares or
capital stock), except that each Party may repurchase, redeem or
acquire shares in it in connection with its employee stock plans in
amounts and to the extent consistent with past practice;
(c) make any declaration, set aside a payment of, or pay any dividend or
other distribution in respect of its capital stock or the capital
stock of its Subsidiaries except (i) in the case of France, the
declaration and the payment in cash by France (I) to the holders of
French Shares of a dividend in an amount not exceeding the regular
annual dividend, consistent with past practice (the amount of such
dividend including the "precompte" tax and any other tax payable by
France under French law in relation thereto being the INITIAL DIVIDEND
AMOUNT) and (II) subject to the consummation of the French Exchange
Offer and prior to the settlement and delivery of Canada Common Shares
to be delivered pursuant to the French Exchange Offer, to the holders
of France Shares of a dividend in an aggregate amount (this amount
including the "precompte" tax or any other tax payable by France under
French tax law in connection with such dividend) in respect of all the
French Shares not exceeding the amount by which US$549,000,000 exceeds
the Initial Dividend Amount, (ii) in the case of Canada, normal
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quarterly dividends consistent with past practice and (iii) dividends
by a wholly owned Subsidiary of a Party to another wholly owned
Subsidiary of that Party (provided in the case of Switzerland such
other wholly owned Subsidiary will be a wholly owned Subsidiary of
Switzerland after the Chemicals Division Demerger), or by a wholly
owned Subsidiary of a Party to that Party;
(d) amend or change its articles of association, bylaws or other
comparable governing instruments;
(e) make or commit for any capital expenditures exceeding an aggregate of
US$ 100 million, in the case of the Canada Group, US$50 million, in
the case of the France Group, and US$50 million, in the case of the
Switzerland; except in all cases for capital expenditures in amounts
not exceeding those provided in the existing group budgets for 1999
and 2000, as applicable, specifically disclosed to the other Parties
prior to the date of the Initial Combination Agreement;
(f) make any investments in assets (other than equipment, inventories and
goods in the ordinary course of business) or shares exceeding an
aggregate of US$500 million, in the case of the Canada Group, US$250
million, in the case of the France Group and US$250 million in the
case of the Switzerland Group; provided, that prior to making any
investment in an aggregate amount in excess of US$100 million, in the
case of the Canada Group and US$50 million in the case of each of the
France Group and the Switzerland Group, it shall notify the other
Parties of such investments;
(g) divest or sell any assets (other than equipment, inventories and goods
in the ordinary course of business) or any shares, or rights to
acquire any shares, in a Subsidiary or associated entity with a fair
market value exceeding an aggregate of US$75 million, in the case of
the Canada Group, US$50 million, in the case of the France Group, and
US$50 million, in the case of the Switzerland Group; provided, that
the Chemicals Division Demerger shall not be included in calculating
such amount for the Switzerland Group;
(h) make any material tax election or permit any of its Subsidiaries to do
so; or
(i) take any action, or permit any of its Subsidiaries to take any action,
that would make any representation or warranty hereunder untrue in any
material respect;
4.1.5.1 Each of France, Canada and Switzerland respectively represents and
warrants that since the date of the Initial Combination Agreement and through
the date hereof neither it nor its Subsidiaries has taken any action (or failed
to take any action) that would have caused it to violate the provisions of
Article 4.1.5 if such Article had been in effect at such time.
4.1.5.2 Each of France, Canada and Switzerland agree that for purposes of
calculating the amounts set forth in subarticles (e), (f) and (g) of Article
4.1.5 all transactions between the date of the Initial Combination Agreement and
the date hereof shall be taken into account.
4.1.6 Each of France, Canada and Switzerland agrees that it shall and shall
cause its Subsidiaries to co-operate with the other Parties and use commercially
reasonable efforts to take, or cause to be taken, all actions required in
connection with (i) the timely production and approval of documentation to be
used in accordance with effecting the Combination, (ii) the making and obtaining
of any governmental or regulatory filings or applications or consents required
to achieve satisfaction as soon as practicable of each of the conditions set out
in Schedule 2, (iii) the listing of the Canada Common Shares to be issued under
each of the Exchange Offers on the New York Stock Exchange, The Toronto Stock
Exchange, SBF, SWX and the London Stock Exchange, (iv) the making and conduct of
the Exchange Offers, and (v) the consummation of each of the Exchange Offers,
including approvals of anti-trust authorities, third parties, securities and
stock exchange authorities and the Applicable Takeover Authorities; such actions
to include also provision of information and, confirming accuracy and
completeness of information provided by it; the public acceptance of
responsibility for information about each Party by the directors of that Party
and the provision of reports and comfort letters and opinions from the
investment bank, auditors and legal advisers of each Party (where required in
connection with an Exchange Offer, registration, listing or shareholder
solicitation document) and in connection therewith:
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(a) Canada, France and Switzerland each agree, as to itself and its
Subsidiaries, that all of the information supplied or to be supplied
by it or its Subsidiaries for inclusion or incorporation by reference
in each document to be used for the purposes of either of the Exchange
Offers or for the purpose of seeking the approval of the shareholders
of Canada to the issue of the New Canada Shares, including, without
limitation, the Canadian take-over bid circular, Proxy Statement, S-4
Registration Statement, Schedule 14D-1, note d'information, the COB
Filing, the CMF Filing, the Joint Prospectus for the French Exchange
Offer, the TOB Filing and the prospectus for the Swiss Exchange Offer,
as of the date such documents are first mailed to shareholders or
declared effective or published, as applicable, will be true, correct
and complete in all material respects, and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading;
(b) Canada, France and Switzerland each shall, upon request by any of the
others, furnish the requesting Party with all information concerning
itself, its Subsidiaries, directors, officers and stockholders and
such other matters as may be reasonably necessary or advisable in
connection with each document to be used for the purposes of either of
the Exchange Offers or for the purpose of seeking the approval of the
shareholders of Canada to the issue of the New Canada Shares,
including, without limitation, the Proxy Statement, Canadian take-over
bid circular, the S-4 Registration Statement, the CMF Filing, the COB
Filing, the note d'information, the Joint Prospectus for the French
Exchange Offer, the TOB Filing, the Schedule 14D-1 and the prospectus
for the Swiss Exchange Offer or any other statement, filing, notice or
application made by or on behalf of Canada, France or Switzerland or
any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Combination or either of
the Exchange Offers or any other transaction contemplated by this
Agreement; and
(c) Canada, France and Switzerland each shall keep the others apprised of
the status of matters relating to completion of the Combination and
each of the Exchange Offers, including promptly furnishing the others
with copies of notices or other communications received by or on
behalf of France, Switzerland or Canada, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity
with respect to the Combination and either of the Exchange Offers or
any other transaction contemplated by this Agreement.
As used in this Agreement, APPLICABLE TAKEOVER AUTHORITY means, with
respect to Switzerland, the relevant regulatory or stock exchange authorities in
Switzerland regulating offers made for shares in public companies and, with
respect to France, the relevant regulatory or stock exchange authorities in
France and the relevant United States regulatory authority regulating offers
made for shares in public companies.
4.1.7 Each of Canada, France and Switzerland agrees that neither it nor any of
its Subsidiaries shall take or cause to be taken any action, whether before or
after the consummation of either of the Exchange Offers, (a) that would prevent
the business combination resulting from the consummation of both of the Exchange
Offers from being accounted for as a "pooling of interests" under Canadian GAAP
or (b) that would cause either of the Exchange Offers to fail to constitute a
"tax-free" exchange of shares to the shareholders in France, Switzerland, and
the United States, who are resident in those countries for tax purposes (other
than a corporation holding Swiss shares with value in excess of CHF 2 million);
provided that no Party shall be deemed to have breached the provisions of this
Article 4.1.7 (a) unless, in the absence of such action, the Combination would
have been so prevented or an Exchange Offer would have so failed or (b) by
reason of taking any action in furtherance of the transactions contemplated
hereby.
4.1.8 Each Party agrees that except with the written consent of each of the
other Parties (which consent shall not be withheld or delayed unreasonably) or
except as required by applicable law or regulation, no Party shall make any
announcement in any jurisdiction in any manner whatsoever with regard to the
Combination or either of the Exchange Offers unless the information announced
was previously disclosed in a substantially similar manner in a disclosure
document filed by one of the Parties with respect to the transactions
contemplated hereby.
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4.1.9 Each of Canada, France and Switzerland agrees that it shall (i) provide
promptly to any and all federal, state, local or foreign court or Government
Entity with jurisdiction over enforcement of any applicable Antitrust Laws
(GOVERNMENT ANTITRUST ENTITY) information and documents requested by any
Government Antitrust Entity, which it is entitled to request under applicable
law, or necessary, proper or advisable to permit consummation of each Exchange
Offer and the Combination and the other transactions contemplated by this
Agreement and shall use commercially reasonable efforts to obtain the consent or
approval of any Government Antitrust Entity thereto and (ii) take promptly, in
the event that any permanent or preliminary injunction or other order is entered
or becomes reasonably foreseeable to be entered in any proceeding that would
make consummation of either of the Exchange Offers or the Combination in
accordance with the terms of this Agreement unlawful or that would prevent or
delay consummation of the Combination or the other transactions contemplated by
this Agreement, commercially reasonable steps (including the appeal thereof or
the posting of a bond) to vacate, modify or suspend such injunction or order so
as to permit such consummation as expeditiously as possible. Any undertakings
required to be given to secure any such regulatory consents or approvals or
necessary in connection with clause (ii) of the preceding sentence shall be on a
basis that is acceptable to each of the Parties, acting reasonably, and shall be
consistent with the best commercial interests of all of the Parties, taken as a
whole.
4.1.10 Canada covenants and agrees that the Proxy Statement shall provide the
shareholders of Canada with the ability to separately approve the issuance of
Canada Common Shares to be issued in the Swiss Exchange Offer and the issuance
of Canada Common Shares to be issued in the French Exchange Offer.
ADDITIONAL COVENANTS BY FRANCE TO EACH OF THE OTHER PARTIES
4.2 France hereby covenants to Canada and Switzerland:
4.2.1 to use its commercially reasonable efforts to assist Canada and
Switzerland to complete the Combination (including the making of the Exchange
Offers and the acceptance of the French Exchange Offer by holders of French
Shares) and to achieve timely satisfaction of each of the conditions set out in
Part B of Schedule 2, including co-operating with Canada and Switzerland in
making all requisite regulatory filings, and giving evidence in relation
thereto, in providing information and in obtaining third party consents as
necessary;
4.2.2 to provide, from time to time as Canada may reasonably request, a list
indicating the aggregate issued share capital in France and changes to it from
the immediately preceding list and of each registered holder of French Shares
and of each registered holder of rights to acquire French Shares together with
such other information relating to the identity of the holders of French Shares
as it may have;
4.2.3 to use its commercially reasonable efforts to (i) (I) enable outstanding
rights, other than employee options, to acquire French Shares granted by France
to be exercised prior to consummation of the French Exchange Offer so that those
French Shares can be tendered under the French Exchange Offer or to cause the
holders of such rights to accept Canada Common Shares in place of French Shares,
(II) permit the exchange, through acceptance of the French Exchange Offer, of
all French Shares held by employees of France through FCPE for Canada Common
Shares (or, if the French Exchange Offer is consummated, rights to acquire
Canada Common Shares using the same ratio as that on which French Ordinary
Shares are acquired under the French Exchange Offer for a reasonable period of
time following the expiry of the period of tax restriction that presently
applies and encourage such exchange) and, (ii) to encourage holders of options
to acquire French Shares granted by France to employees of France and its
Subsidiaries to accept the offer to be made by Canada pursuant to Article 4.4.7;
and
4.2.4 not to, and to procure that Pechiney Nederland N.V. does not, dispose of
any of the 982,669 French Shares held by Pechiney Nederland N.V. and not to, and
to procure that Pechiney Nederland N.V. does not, accept the French Exchange
Offer in respect of such French Shares.
ADDITIONAL COVENANTS BY SWITZERLAND TO EACH OF THE OTHER PARTIES
4.3 Switzerland hereby covenants to France and Canada:
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4.3.1 that subject to obtaining all necessary regulatory approvals/clearances
and the approval of the holders of Swiss Shares, Switzerland shall cause its
(i) fine chemicals and specialities and (ii) its intermediaries and additives
divisions as well as its energy business to be extracted from the Switzerland
Group in accordance with the terms and conditions and with the effect described
in Schedule 4 hereto (the CHEMICALS DIVISION DEMERGER) and that the Chemicals
Division Demerger shall have occurred so as to obtain the benefit of the Swiss
Tax Ruling (as defined in Schedule 4);
4.3.2 to (i) convene a shareholders meeting as soon as practicable, for the
purpose of voting upon the approval of the Chemicals Division Demerger and
(ii) to the extent permissible under applicable law, to recommend that
shareholders approve the Chemicals Division Demerger;
4.3.3 to use its commercially reasonable efforts to assist Canada and France to
complete successfully the Combination (including the making of the Exchange
Offers and their acceptance by shareholders of France and Switzerland) and to
achieve timely satisfaction of each of the conditions set out in Schedule 2 and
of the conditions which will form part of the Swiss Exchange Offer, including
co-operating with Canada and France in making all requisite regulatory filings,
and giving evidence in relation thereto, providing information and in obtaining
third party consents as necessary;
4.3.4 to provide, from time to time as Canada may reasonably request, a list
indicating the aggregate issued share capital in Switzerland and changes to it
from the immediately preceding list and of each registered holder of Swiss
Shares and of each registered holder of rights to be issued Swiss Shares
together with such other information relating to the identity of its
shareholders that it may have;
4.3.5 to use its commercially reasonable efforts to enable rights, other than
employee options, to acquire Swiss Shares granted by Switzerland to be exercised
prior to the consummation of the Swiss Exchange Offer so that the Swiss Shares
can be tendered under the Swiss Exchange Offer or to cause the holders of such
shares to accept Canada Common Shares in place of Swiss Shares and to use
commercially reasonable efforts to permit the exchange of all outstanding rights
to acquire Swiss Shares granted by Switzerland for Canada Common Shares (or
rights to acquire Canada Common shares) on terms that provide the holder with
equivalent economic benefits;
4.3.6 if necessary, as soon as reasonably practicable after the date hereof,
convene and hold a meeting of shareholders of Switzerland for the purpose of
presenting to the shareholders of Switzerland a proposal, and, subject to
applicable law, the positive recommendation of the Board of Directors of
Switzerland to adopt a clause in the Articles of Association of Switzerland
whereby the Swiss tender offer rules requiring a mandatory bid shall not apply
to the Swiss Exchange Offer;
4.3.7 to use its commercially reasonable efforts to obtain on terms satisfactory
to it all consents and authorizations necessary to complete the Chemicals
Division Demerger; and
4.3.8 that it will not permit any adjustment to the conversion terms of the two
convertible issues referred to in the Swiss Disclosure Letter to occur by reason
of the completion of the Chemical Division Demerger such that more than
6,641,796 Swiss Shares will be outstanding assuming full conversion of such
convertibles provided that if the number of Swiss Shares outstanding would
exceed such amount, the exchange ratio for the Swiss Exchange Offer will be
adjusted in Canada's favor to take account of such excess.
ADDITIONAL COVENANTS BY CANADA TO EACH OF THE OTHER PARTIES
4.4 Canada hereby covenants with France and Switzerland:
4.4.1 to use its best efforts to procure that the Canada Common Shares to be
issued pursuant to the Exchange Offers are listed on the New York Stock
Exchange, The Toronto Stock Exchange, the SWX, the SBF and the London Stock
Exchange at the time of expiration of the conditions to the consummation of the
applicable Exchange Offer, subject to official notice of issuance and freely
transferable through the facilities of such exchanges under applicable law
except by a holder of a sufficient number of shares to affect materially the
control of Canada;
4.4.2 to duly convene a meeting of holders of Canada Common Shares (the
STOCKHOLDERS MEETING) as promptly as practicable (but in no event later than 15
November 1999) to consider and vote upon the
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approval of the issuance of Canada Common Shares pursuant to each of the French
Exchange Offer and the Swiss Exchange Offer;
4.4.3 to promptly prepare with the full participation and cooperation of France
and Switzerland and as soon as practicable after the date hereof, mail to its
shareholders a form of proxy together with a management information circular
(which shall include the positive recommendation of the Board of Directors of
Canada required hereby) for use in connection with obtaining such approval (the
PROXY STATEMENT). Canada shall, on the date the Proxy Statement is first mailed
to its shareholders, file the Proxy Statement with all applicable Canadian
securities authorities;
4.4.4 to use its commercially reasonable efforts to assist the other Parties to
complete the Combination (including the making of the Exchange Offers and their
acceptance by shareholders of France and Switzerland) and to achieve timely
satisfaction of each of the conditions set out in Schedule 2 and of the
conditions which will form part of the Exchange Offers, including co-operating
with the other Parties in making all requisite regulatory filings, and giving
evidence in relation thereto, providing information and in obtaining third party
consents as necessary;
4.4.5 to use commercially reasonable efforts to permit the exchange, through
acceptance of the French Exchange Offer, of all of the French Shares held by
France Group employees through FCPE for Canada Common Shares (or, if the French
Exchange Offer is consummated, rights to acquire Canada Common Shares using the
same ratio as that on which French Ordinary Shares are acquired under the French
Exchange Offer for a reasonable period of time following the expiry of the
period of tax restriction that presently applies);
4.4.6 to seek any relief necessary from the SEC to permit the France Exchange
Offer to be conducted in the United States on a basis consistent with the
conduct of the French Exchange Offer in France;
4.4.7 prior to the expiration of the French Exchange Offer to offer (such offer
to be subject only to the conditions that the French Exchange Offer shall have
become unconditional and shall have been consummated) to each employee or former
employee of France and its Subsidiaries holding options to purchase French
Shares, to exchange, if such employee exercises any of such options at any time,
for each French Share issued to such employee pursuant to each such option
exercised, forthwith after its issue, Canada Common Shares using the same ratio
as that on which Ordinary Shares are acquired under the French Exchange Offer.
The foregoing offer of this right will comply with all applicable laws, be open
for acceptance for a period of approximately 25 trading days, will be on
detailed terms to be established at the time, will state that Canada may not be
prepared to exchange French Shares acquired pursuant to the options for Canada
Common Shares except pursuant to this right, will contain an authority/attorney
in favour of Canada or one of its officers to effect such exchange on the
applicable employee's behalf and will contain appropriate provisions for
adjustment of the foregoing exchange ratio to prevent dilution; and
4.4.8 to use commercially reasonable efforts while regularly reporting to and
consulting with France and Switzerland to, as promptly as practicable, obtain
private legislation in order to cause all requirements under the Canada Business
Corporations Act with respect to "resident Canadians" on Canada's Board of
Directors to be declared inoperative or otherwise altered so that those
requirements do not apply to Canada.
ARTICLE 5
INTENTIONALLY OMITTED
ARTICLE 6
CORPORATE GOVERNANCE AND DIRECTORS AND OFFICERS INDEMNIFICATION
6.1 CORPORATE GOVERNANCE
The Parties will take all actions that may be required to give effect to
the matters set forth in Schedule 3, upon consummation of each of the Exchange
Offers.
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6.2 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE
6.2.1 From and after the consummation of the Swiss Exchange Offer, with respect
to the directors and officers of Switzerland and its Subsidiaries, and from and
after the consummation of the French Exchange Offer, with respect to the
directors and officers of France and its Subsidiaries, Canada agrees that it
will indemnify and hold harmless each present and former director and officer of
Switzerland and France and their respective Subsidiaries (the INDEMNIFIED
PARTIES), against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively, COSTS)
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
consummation of the relevant Exchange Offer, whether asserted or claimed prior
to, at or after such consummation, to the fullest extent permitted by applicable
law (and Canada shall also advance expenses as incurred). If such indemnity is
not available with respect to any Indemnified Party, then Canada and the
Indemnified Party shall contribute to the amount payable in such proportion as
is appropriate to reflect relative faults and benefits (treating Canada in such
case as if it were Switzerland or France).
6.2.2 Canada shall maintain each of France's and Switzerland's existing
officers' and directors' liability insurance (each being D&O INSURANCE) for a
period of six years after the consummation of the France Exchange Offer or the
Swiss Exchange Offer, as the case may be; provided, however, that if the
existing D&O Insurance expires, is terminated or canceled by the carrier during
such six-year period, Canada will use its commercially reasonable efforts to
obtain as much D&O Insurance as can be obtained for the remainder of such
period.
6.2.3 The provisions of Articles 6.2.1 and 6.2.2 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives and each of France and Switzerland is executing
this Agreement as trustee for the benefit of the Indemnified Parties and their
heirs and their representatives.
6.3 After the persons proposed by Switzerland, as specified on Schedule 3
shall have become directors of Canada, Switzerland shall use reasonable
commercial efforts to procure, and procure that the Board of Directors of
Switzerland shall, subject to their fiduciary duties under applicable law,
cooperate with the making of changes to the composition of the Board of
Directors of Switzerland including, without limitation, promptly convening a
meeting of the shareholders of Switzerland to vote on resolutions to appoint and
remove directors of Switzerland.
ARTICLE 7
TERMINATION FEES
7.1 PAYMENTS BY FRANCE
If (x) this Agreement is terminated with respect to France (a) by France
pursuant to Article 8.3.1(d) or (b) by Canada pursuant to Article 8.2.2(d) or
(y) following the commencement of the French Exchange Offer Period, the Board of
Directors of France as permitted by Article 1.2.1(v), withdraws or adversely
modifies its recommendation that holders of French Shares tender their French
Shares in the French Exchange Offer or recommends an Alternative Transaction to
its shareholders, then France shall, prior to or concurrently with a termination
referred to in Article 7.1(x)(a), within two days following a termination
referred to in Article 7.1(x)(b) and within two days following taking the action
referred to in Article 7.1(y), pay the Fee, in each such case to be divided
equally between Canada and Switzerland, unless the Agreement shall have
previously been terminated with respect to Switzerland, without obligation to
make payment of any portion of the Fee, in which case Canada shall receive 100%
of the Fee.
7.2 PAYMENTS BY SWITZERLAND
If (x) this Agreement is terminated with respect to Switzerland (a) by
Canada pursuant to Article 8.2.1(d) or (b) by Switzerland pursuant to Article
8.4.1(d) or (y) following the commencement of the Swiss Exchange Offer, the
Board of Directors of Switzerland (I) as permitted by Article 1.3.1(iv)
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withdraws or adversely modifies its recommendation that shareholders of
Switzerland tender their Swiss Shares in the Swiss Exchange Offer or (II)
recommends an Alternative Transaction to its shareholders, then Switzerland
shall, prior to or concurrently with a termination referred to in Article
7.2(x)(b), within two days following a termination referred to in Article
7.2(x)(a) and within two days following taking the action referred to in Article
7.2(y), pay the Fee, in each such case, to be divided equally between Canada and
France, unless the Agreement shall have previously been terminated with respect
to France, without obligation to make payment of any portion of the Fee, in
which case, Canada shall receive 100% of the Fee.
7.3 PAYMENTS BY CANADA
If (x) this Agreement is terminated (a) by Canada pursuant to Article
8.2.3, (b) by France pursuant to Article 8.3.1(e) or (c) by Switzerland pursuant
to Article 8.4.1(e) or (y) following the commencement of the Swiss Exchange
Offer or the French Exchange Offer Period, the Board of Directors of Canada as
permitted by Article 1.4.3 withdraws or adversely modifies its recommendation
that shareholders of Canada approve the issue of Canada Common Shares in
connection with each of the Swiss Exchange Offer and the French Exchange Offer,
then Canada shall, prior to or concurrently with a termination referred to in
Article 7.3(a), within two days following a termination referred to in Articles
7.3(b) and (c) and within two days following taking the action referred to in
Article 7.3(y), pay the Fee, in each such case, to be divided equally between
Switzerland and France, unless the Agreement shall have previously been
terminated with respect to (i) France, without obligation to make payment of any
portion of the Fee, in which case Switzerland shall receive 100% of the Fee or
(ii) Switzerland, without obligation to make payment of any portion of the Fee,
in which case France shall receive 100% of the Fee.
7.4 FEE
The aggregate fee payable hereunder by any Party shall be US$150,000,000
(the FEE) until such time as this Agreement has been terminated with respect to
one Party in which case the Fee shall be US$100,000,000 except with respect to
any prior obligation, or obligation resulting from such termination, to pay the
Fee and none of Canada, France or Switzerland shall be liable to pay more than
that amount under this Article 7.
ARTICLE 8
TERMINATION
8.1 TERMINATION BY CANADA, FRANCE AND SWITZERLAND
This Agreement may be terminated with respect to (i) Switzerland, whether
before or after the commencement of the Swiss Exchange Offer, to the extent
permitted under applicable law or stock exchange rule by the mutual written
consent of each of Switzerland and Canada by action of their respective Boards
of Directors or (ii) France, whether before or after commencement of the French
Exchange Offer, to the extent permitted under applicable law or stock exchange
rule by the mutual written consent of France and Canada by action of their
respective Boards of Directors.
8.2 TERMINATION BY CANADA
8.2.1 Canada may terminate this Agreement, with respect to Switzerland, by
written notice to the other Parties if prior to the commencement of the Swiss
Exchange Offer:
(a) any of the conditions set out in Part A of Schedule 2 has become
incapable of satisfaction (including as a result of Canada's
unwillingness to waive satisfaction of such condition where its
consent to waiver is required); provided, that Canada shall have
provided written notice of its intention to terminate pursuant to this
Article 8.2.1(a) to the other Parties at least 10 days prior to
termination (and in its notice of termination Canada shall specify the
condition concerned); and, provided, further, that a condition
waivable only by Switzerland shall not be deemed incapable of
satisfaction for purposes of this Article 8.2.1(a);
(b) Switzerland is in material breach of any of its material obligations
set forth in this Agreement that is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by
Canada to France and Switzerland;
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(c) the Swiss Exchange Offer shall not have been commenced by Canada by
June 30, 2000;
(d) the Board of Directors of Switzerland shall have withdrawn or
adversely modified its recommendation that shareholders of Switzerland
tender their Swiss Shares in the Swiss Exchange Offer other than
pursuant to Article 1.3.1 (i), (ii) or (iii) or shall have recommended
an Alternative Transaction to its shareholders; or
(e) a Switzerland Material Adverse Effect shall have occurred after the
date of this Agreement.
8.2.2 Canada shall be entitled to terminate the provisions of this Agreement
with respect to France by written notice to the other Parties if, prior to the
commencement of the French Exchange Offer Period:
(a) any of the conditions set out in Part B of Schedule 2 has become
incapable of satisfaction (including as a result of Canada's
unwillingness to waive satisfaction of such condition where its
consent to waiver is required); provided, that Canada shall have
provided the written notice of its intention to terminate pursuant to
this Article 8.2.2(a) to the other Parties at least 10 days prior to
termination (and in its notice of termination Canada shall specify the
condition concerned); and, provided, further, that a condition
waivable only by France shall not be deemed incapable of satisfaction
for purposes of this Article 8.2.2(a);
(b) France is in material breach of any of its material obligations set
forth in this Agreement that is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by
Canada to France and Switzerland;
(c) the French Exchange Offer Period shall not have commenced by June 30,
2000;
(d) the Board of Directors of France shall have withdrawn or adversely
modified its recommendation that shareholders of France tender their
French Shares in the French Exchange Offer other than pursuant to
Article 1.2.1 (i), (ii), (iii) or (iv) or shall have recommended an
Alternative Transaction to its shareholders; or
(e) a France Material Adverse Effect shall have occurred after the date of
this Agreement.
8.2.3 Canada shall be entitled to terminate this Agreement by written notice to
the other Parties if, prior to the commencement of the later to be commenced of
the Exchange Offers, Canada shall have provided written notice to the other
Parties of its intention to enter into an agreement providing for an Alternative
Transaction or its Board of Directors' shall have resolved to recommend an
Alternative Transaction; provided, that Canada shall not be entitled to
terminate this Agreement pursuant to this Article 8.2.3 if it is in breach of
Article 4.1.2; provided, further, that this Article 8.2.3 shall be effective
only with respect to the provisions of this Agreement relating to France if the
Swiss Exchange Offer shall have been commenced prior to the time of a
termination pursuant to this Article 8.2.3 and, provided, further, that this
Article 8.2.3 shall be effective only with respect to the provisions of this
Agreement relating to Switzerland if the French Exchange Offer Period shall have
been commenced prior to the time of a termination pursuant to this Article
8.2.3.
8.2.4 Canada shall not be entitled to exercise any of its termination rights
under Article 8.2.1 or 8.2.2 if at the time it seeks to exercise such rights it
is in material breach hereunder. Notwithstanding any such breach, Canada shall
be permitted to exercise its termination right specified in Article 8.2.2(c).
8.3 TERMINATION BY FRANCE
8.3.1 France shall be entitled to terminate the provisions of this Agreement
with respect to itself, by written notice to the other Parties, if prior to the
commencement of the French Exchange Offer Period:
(a) any of the conditions set out in Part B of Schedule 2 has become
incapable of satisfaction (including as a result of France's
unwillingness to waive satisfaction of such condition where its
consent to waiver is required) (and in its notice of termination
France shall specify the condition concerned); provided, that France
shall have provided the written notice to the other Parties of its
intention to terminate pursuant to this Article 8.3.1(a) at least 10
days prior to termination; and, provided, further, that a condition
waivable only by Canada shall not be deemed incapable of satisfaction
for purpose of this Article 8.3.1(a);
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(b) Canada is in material breach of any of its material obligations set
forth in this Agreement that is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by
France to Canada and Switzerland;
(c) the French Exchange Offer Period shall not have commenced by June 30,
2000;
(d) France shall have provided written notice to the other Parties of its
intention to enter into an agreement providing for an Alternative
Transaction or its Board of Directors shall have resolved to recommend
an Alternative Transaction; provided, that France shall not be
permitted to terminate this Agreement pursuant to this Article
8.3.1(d) if it is in breach of Article 4.1.2;
(e) the Board of Directors of Canada shall have withdrawn or adversely
modified its recommendation that the shareholders of Canada approve
the issuance of Canada Common Shares pursuant to this Agreement for
purposes of the French Exchange Offer other than pursuant to Article
1.4.1 or Canada shall have recommended an Alternative Transaction to
its shareholders;
(f) a Canada Material Adverse Effect shall have occurred after the date of
the Agreement; or;
(g) the Board of Directors of Canada shall have withdrawn or adversely
modified its recommendation that the shareholders of Canada approve
the exporting of Canada's incorporation as contemplated in Schedule 3.
8.3.2 Provided that Canada has not taken all necessary actions to permit the
persons proposed by France, specified on Schedule 3 to become directors of
Canada, prior to the consummation of the Swiss Exchange Offer, France shall be
entitled to terminate the provisions of this Agreement with respect to
Switzerland, by written notice to the other Parties if, prior to the
commencement of the Swiss Exchange Offer any of the conditions set forth in Part
A of Schedule 2 has become incapable of satisfaction (including as a result of
France's unwillingness to waive satisfaction of such condition where its consent
to waiver is required) provided, that France shall have provided the written
notice of its intention to terminate pursuant to this Article 8.3.2 to the other
Parties at least 10 days prior to termination (and in its notice of termination
France shall specify the condition concerned); and, provided, further, that a
condition waivable only by Switzerland or Canada (or both) shall not be deemed
incapable of satisfaction for purposes of this Article 8.3.2.
8.3.3 France shall not be entitled to exercise any of its termination
rights under this Article 8.3 if at the time it seeks to exercise such rights it
is in material breach hereunder. Notwithstanding any such breach, France shall
be entitled to exercise its termination right pursuant to Article 8.3.1(d),
except as otherwise provided in Article 8.3.1(d), and its termination right
pursuant to Article 8.3.1(c).
8.4 TERMINATION BY SWITZERLAND
8.4.1 Switzerland shall be entitled to terminate this Agreement, with respect to
itself, by written notice to the other Parties, if prior to the commencement of
the Swiss Exchange Offer:
(a) any of the conditions set out in Part A of Schedule 2 has become
incapable of satisfaction (including as a result of Switzerland's
unwillingness to waive satisfaction of such condition where its
consent to waiver is required); provided, that Switzerland shall have
provided the written notice to the other Parties of its intention to
terminate pursuant to this Article 8.4.1(a) at least 10 days prior to
termination (and in its notice of termination Switzerland shall
specify the condition concerned); and, provided, further, that a
condition waivable only by Canada shall not be deemed incapable of
satisfaction for purposes of this Article 8.4.1(a);
(b) Canada is in material breach of any of its material obligations set
forth in this Agreement that is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by
Switzerland to Canada and France;
(c) the Swiss Exchange Offer shall not have been commenced by Canada by
June 30, 2000;
(d) Switzerland shall have provided written notice to the other Parties of
its intention to enter into an agreement providing for an Alternative
Transaction or its Board of Directors shall have resolved to recommend
an Alternative Transaction; provided, that Switzerland shall not be
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permitted to terminate this Agreement pursuant to this Article
8.4.1(d) if it is in breach of Article 4.1.2;
(e) the Board of Directors of Canada shall have withdrawn or adversely
modified its recommendation that the shareholders of Canada approve
the issuance of Canada Common Shares pursuant to this Agreement for
purposes of the Swiss Exchange Offer other than pursuant to Article
1.4.2 or Canada shall have recommended an Alternative Transaction to
its shareholders;
(f) a Canada Material Adverse Effect shall have occurred after the date of
this Agreement; or
(g) the Board of Directors of Canada shall have withdrawn or adversely
modified its recommendation that the shareholders of Canada approve
the exporting of Canada's incorporation as contemplated by Schedule 3.
8.4.2 Provided that Canada has not taken all necessary actions to permit the
persons proposed by Switzerland and specified on Schedule 3 to become Directors
of Canada, prior to the commencement of the French Exchange Offer Period,
Switzerland shall be entitled to terminate the provisions of this Agreement with
respect to France by written notice to the other Parties if, prior to the
commencement of the French Exchange Offer Period any of the conditions set forth
in Part B of Schedule 2 has become incapable of satisfaction (including as a
result of Switzerland's unwillingness to waive satisfaction of such condition
where its consent to waiver is required); provided, that Switzerland shall have
provided the written notice to the other Parties of its intention to terminate
pursuant to this Article 8.4.2 at least 10 days prior to termination (and in its
notice of termination Switzerland shall specify the condition concerned); and,
provided, further, that a condition waivable only by Canada or France (or both)
shall not be deemed incapable of satisfaction for purposes of this Article
8.4.2.
8.4.3 Switzerland shall not be entitled to exercise any of its termination
rights under this Article 8.4 if at the time it seeks to exercise such rights it
is in material breach hereunder. Notwithstanding any such breach, Switzerland
shall be entitled to exercise its termination right pursuant to Article
8.4.1(d), except as otherwise provided in Article 8.4.1(d), and its termination
right pursuant to Article 8.4.1(c).
8.5 TERMINATION WITHOUT NOTICE
8.5.1 The provisions of this Agreement with respect to Switzerland shall
terminate automatically, if (i) the Swiss Exchange Offer shall have expired
without the purchase of Swiss Shares thereunder following any required or
permitted extensions of the Swiss Exchange Offer or (ii) prior to the
commencement of the Swiss Exchange Offer the shareholders of Canada shall have
failed to approve the issuance of Canada Common Shares pursuant to the Swiss
Exchange Offer by the Requisite Vote at a meeting duly held for that purpose.
8.5.2 The provisions of this Agreement with respect to France shall terminate
automatically, if (i) the French Exchange Offer shall have expired without the
purchase of French Shares thereunder following any required or permitted
extensions of the French Exchange Offer or (ii) prior to the commencement of the
French Exchange Offer the shareholders of Canada shall have failed to approve
the issuance of Canada Common Shares pursuant to the French Exchange Offer by
the Requisite Vote at a meeting duly held for that purpose.
8.6 EFFECT OF TERMINATION PROVISIONS
8.6.1 If this Agreement is terminated under this Article 8 solely with respect
to France then (except in relation to obligations under the Surviving
Provisions, which shall survive termination) this Agreement shall terminate and
be of no further force or effect as between (i) Canada and Switzerland on the
one hand and (ii) France on the other hand, and Canada and Switzerland, on the
one hand, shall have no further obligations to France on the other and France
shall have no further rights or obligations hereunder in each case other than
with respect to breaches by any Party prior to such termination. As between
Canada and Switzerland, this Agreement, after such termination, shall continue
as an agreement between the two of them pursuant to which Canada agreed to make
the Swiss Exchange Offer and this Agreement shall be construed and take effect
as if France had never been a party to this Agreement and Canada had never been
obligated to make the French Exchange Offer.
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8.6.2 If this Agreement is terminated under this Article 8 solely with respect
to Switzerland then (except in relation to obligations under the Surviving
Provisions, which shall survive termination) this Agreement shall terminate and
be of no further force or effect as between (i) Canada and France on the one
hand and (ii) Switzerland on the other hand, and Canada and France, on the one
hand, shall have no further obligations to Switzerland on the other and
Switzerland shall have no further rights or obligations hereunder in each case
other than with respect to breaches by any Party prior to such termination. As
between Canada and France, this Agreement, after such termination, shall
continue as an agreement between the two of them pursuant to which Canada agreed
to make the French Exchange Offer, and this Agreement shall be construed and
take effect as if Switzerland had never been a party to this Agreement and
Canada had never been obligated to make the Swiss Exchange Offer.
8.7 In the event this Agreement is terminated with respect to all of the
Parties under this Article 8, then this Agreement (except in relation to
obligations under the Surviving Provisions, which shall survive termination)
shall become void and of no effect.
8.8 Termination hereunder shall not relieve any Party from liability arising
under this Agreement prior to termination and shall not affect the other Party's
right subsequently to claim damages or other compensation under applicable law
for any such breach arising before termination, including under Article 7.
8.9 In this Agreement the SURVIVING PROVISIONS means Article 7, the
provisions of the Confidentiality Agreement, Article 9, Article 8.8 and Article
8.9, which shall all survive termination.
ARTICLE 9
GENERAL
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties shall not, in the case of France, survive the
consummation of the French Exchange Offer and, in the case of Switzerland, the
consummation of the Swiss Exchange Offer. The representations and warranties
shall not, in the case of Canada, with respect to France, survive the
consummation of the French Exchange Offer and, with respect to Switzerland,
survive the consummation of the Swiss Exchange Offer. No investigations made by
or on behalf of any Party hereunder or any of their authorized agents at any
time shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation or warranty or covenant made by the Corporation in
or pursuant to this Agreement, provided that no Party may rely on any
representation or warranty which it knew was untrue at the time it was given.
The covenants made hereunder shall survive in accordance with the terms of this
Agreement.
9.2 ASSIGNMENT. This Agreement shall not be assignable by any Party hereto
without the consent of the other Parties by operation of law or otherwise.
9.3 TIMING. Time shall be of the essence in this Agreement.
9.4 NO PARTNERSHIP OR AGENCY. Nothing in this Agreement (or any of the
arrangements contemplated by it) shall be deemed to constitute a partnership
between the Parties nor, save as may be expressly set out in it, constitute any
Party the agent of another Party for any purpose.
9.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of England without regard to its conflict of laws
principles.
9.6 SETTLEMENT OF DISPUTES. Any dispute arising out of or in connection with
this Agreement shall be subject to the jurisdiction of the English courts, to
which each Party hereby submits for such purpose, and each will, if necessary,
appoint an agent for service of process in England.
9.7 ENTIRE AGREEMENT. This Agreement, the France Disclosure Letter, the
Switzerland Disclosure Letter and the Canada Disclosure Letter, the letter from
Canada to Switzerland dated the date of the Initial Combination Agreement, the
Schedules hereto, the letter delivered by Canada to Switzerland and France dated
August 11, 1999, together with the confidentiality agreement dated June 21, 1999
between Canada, Switzerland and France (the CONFIDENTIALITY AGREEMENT),
constitute the entire agreement and understanding between and among the Parties
hereto with respect to the subject matter hereof and
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supersedes any prior agreement (including the MOU and the Initial Combination
Agreement), representation or understanding with respect thereto other than any
rights arising from any breaches of the Initial Combination Agreement dated
August 11, 1999 between Canada and Switzerland. Each party hereto agrees that,
except for representations and warranties expressly contained in this Agreement
(including the Schedules hereto), none of Canada, France and Switzerland makes
any other representations or warranties, and each hereby disclaims any other
representations or warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement, notwithstanding the
delivery or disclosure to the other or the other's representatives of any
documentation or other information with respect to any one or more of the
foregoing.
9.8 SPECIFIC PERFORMANCE AND OTHER EQUITABLE RIGHTS. Each of the Parties
recognises and acknowledges that this Agreement is an integral part of the
Exchange Offers, that Canada would not make the Exchange Offers, and that the
other Parties would not agree to facilitate the Exchange Offers, unless this
Agreement was executed, and accordingly acknowledges and agrees that a breach by
a Party of any warranties, covenants or other commitments contained in this
Agreement will cause any of the other Parties to sustain injury for which it
would not have an adequate remedy at law for money damages. Therefore, each of
the Parties agrees that in the event of any such breach, the aggrieved Party
shall be entitled to the remedy of specific performance of such covenants or
commitments and preliminary and permanent injunctive and other equitable relief
in addition to any other remedy to which it may be entitled, at law or in
equity, and the Parties further agree to waive, to the extent permitted by
applicable law any requirement for the securing or posting of any bond or giving
an undertaking in damages in connection with the obtaining of any such
injunctive or other equitable relief.
9.9 INFORMATION. Notwithstanding anything to the contrary herein including,
without limitation, the obligations of cooperation and participation undertaken
by the Parties in respect of the Exchange Offers, each Party shall be
responsible for the accuracy and completeness, to relevant prospectus standards,
only of the information with respect to it specifically agreed by it in writing
to be included in specific documents in the context of the Exchange Offers
(including the documents to be sent to shareholders of Canada in connection with
the issuance of Canada Common Shares pursuant to the Exchange Offers), and, in
relation to the pro forma presentation of information in connection with the
Exchange Offers, including the documents to be sent to shareholders of Canada in
connection with the issuance of Canada Common Shares pursuant to the Exchange
Offers, of all information and disclosure about and provided by it which
underlies that pro forma presentation. The Parties also will be jointly
responsible for the accuracy and completeness of information and disclosure
about the Combination (including information regarding the adjustments
underlying the pro forma presentation as well as the pro forma results of such
adjustments); provided, that with respect to information and disclosure that
relates solely to a transaction between either Canada and Switzerland or Canada
and France, only those Parties to which such information and disclosure relates
shall be jointly responsible for the accuracy and completeness of such
information and disclosure. A statement to the foregoing effect shall be
included in all relevant disclosure documents.
9.10 NOTICES. Any notice, request, consent, agreement or approval which may or
is required to be given pursuant to this Agreement shall be in writing and shall
be sufficiently given or made if delivered (by mail or by facsimile), in the
case of:
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SWITZERLAND FRANCE
Xxxxxxxxxxxxxx 0, Xxxxxxxx,
XX Xxx 0, xxxxx xx Xxxxxxxxxx Xxxxxxxx,
XX 0000 Zurich. 00000 Xxxxx, Xxxxxx
Attention: Chief Legal Officer Attention: Xxxxxxx Xxxx-Charreton
fax: ( ) x000 000-0000 fax: x00 (0)0 00 00 00 06
(with a copy to Xxxxx X. Xxxxxx (with a copy to Didier Xxxxxx
Xxxxxxxx & Xxxxxxxx, Xxxxxx Prat et Associes
St. Olave's House 000, xxx xx Xxxxxxxx Xxxxx-Xxxxxx
0x Xxxxxxxxxx Xxxx 00000 Xxxxx, Xxxxxx
London, England fax: x00 (0)0 00 00 00 73)
XX0X 0XX
fax: x00000 000 0000)
CANADA
Alcan Aluminium Limited,
0000 Xxxxxxxxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxx
X0X 0X0, Xxxxxx
Attention: Xxxxx XxXxxxxxx, Chief Legal Officer
fax: (000) 000-0000
(with a copy to Xxxxx Xxxxxxxxxx
Freshfields
00 Xxxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxx 00000
Fax: x00 (0)0 0000 0000)
or to such other address or facsimile number as the relevant Party may from time
to time advise by notice in writing given pursuant to this Article. The date of
receipt of any such notice, request, consent, agreement or approval shall be
deemed to be the date of delivery or telecopy (if during normal business hours
or, if not, the next business day).
9.11 EXPENSES. Each of the Parties shall pay its legal, financial advisory and
accounting costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and all documents and instruments
executed, prepared or filed pursuant hereto or any other costs and expenses
whatsoever and howsoever incurred.
9.12 COUNTERPARTS. This Agreement may be executed in one or more counterparts
which together shall be deemed to constitute one valid and binding agreement and
delivery of the counterparts may be effected by means of a telecopied
transmission.
9.13 AMENDMENTS. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by all of the Parties hereto.
9.14 SEVERABILITY. If any provision of this Agreement is held to be invalid or
unenforceable, then such provision shall (so far as it is invalid or
unenforceable) be given no effect and shall be deemed not to be included in this
Agreement but without invalidating any of the remaining provisions of this
Agreement. The parties shall then use all commercially reasonable efforts to
replace the invalid or unenforceable provisions by a valid and enforceable
substitute provision the effect of which is as close as possible to the intended
effect of the invalid or unenforceable provision.
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IN WITNESS WHEREOF, the undersigned have each executed and delivered this
agreement as of the date first above written.
ALCAN ALUMINIUM LIMITED
By: /s/ Xxxxxxx Xxxxxx
-------------------
PECHINEY
By: /s/ Xxxx-Xxxxxx Xxxxxx
-----------------------
ALUSUISSE LONZA GROUP AG
By: /s/ Xxxxxx Xxxxxxxxxx
----------------------
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SCHEDULE 1
DETAILS OF THE SWISS EXCHANGE OFFER
OFFEROR: Canada, following satisfaction or due waiver of the
conditions to the commencement of the Swiss Exchange
Offer.
SHARES TO BE OFFERED FOR: all of the Swiss shares with all rights attached
thereto except rights arising from the Chemicals
Division Demerger.
JURISDICTIONS IN WHICH Switzerland and such further jurisdictions as are
THE OFFER WILL BE MADE: agreed to by Canada and Switzerland (such agreement
not to be unreasonably withheld or the delayed).
OFFER CONSIDERATION: Canada Common Shares at the rate of 20.6291 Canada
Common Shares for each Swiss Share (the CANADA SWISS
OFFER SHARES).
FRACTIONS: Fractions of Canada Common Shares will not be issued.
Instead, Canada will make arrangements on reasonable
terms for Canada Common Shares representing
fractional entitlements to be aggregated and sold on
the market and the net proceeds of sale (converted at
the spot rate of exchange into Swiss francs) to be
distributed amongst the persons entitled thereto or
such other procedure agreed to by Switzerland and
Canada to equitably compensate holders of Swiss
Shares for fractional share interests in Canada
Common Shares.
OFFER CONDITIONS: The Swiss Exchange Offer shall become unconditional
if at the end of the Swiss Exchange Offer Acceptance
Period the following conditions shall have been
satisfied or duly waived:
(i) the approval, at a general shareholders'
meeting of Canada, of the issue of Canada
Common Shares to be issued as consideration
pursuant to the Swiss Exchange Offer (which
condition may be waived by Canada, without
prejudice to any other rights Switzerland may
have hereunder);
(ii) at the end of the applicable Swiss Exchange
Offer Acceptance Period, Canada having
received valid acceptances (which have not
been withdrawn) in respect of more than 67 per
cent of the total number of Swiss Shares
calculated on a fully diluted basis as of the
end of such Swiss Exchange Offer Acceptance
Period (the SWISS MINIMUM CONDITION);
(iii) the Chemicals Division Demerger having been
completed;
(iv) The European Commission having adopted a
decision under Articles 6(1)(b) or 8(2) of
Council Regulation No 4064/89/ EEC clearing
the Swiss Exchange Offer (the SWISS EC
CLEARANCE); and
(v) The Swiss Competition Commission having
adopted a decision clearing the Swiss Exchange
Offer, if and to the extent required.
SWISS EXCHANGE OFFER Excluding the initial period of 10 trading days when
ACCEPTANCE PERIOD: shares cannot be tendered in relation to which a
waiver will be sought:
(i) the Swiss Exchange Offer will be open for
acceptance for 20 trading days. Canada shall
have the right to extend the
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Swiss Exchange Offer on one or more occasions
for a total duration of 40 trading days and
shall be obliged to so extend upon the request
of Switzerland; and
(ii) there will be no further extension of the
period during which the Swiss Exchange Offer
is open for acceptance unless it is required
by the Applicable Takeover Authority,
including to permit satisfaction of conditions
(the SWISS EXCHANGE OFFER ACCEPTANCE PERIOD).
SWISS EXCHANGE OFFER the Swiss Exchange Offer Acceptance Period plus:
PERIOD: (i) whatever time is required thereafter to
establish that all the conditions to the Swiss
Exchange Offer have been satisfied, or that
the Swiss Exchange Offer has failed; and
(ii) if all the conditions to the Swiss Exchange
Offer are satisfied so that it becomes
unconditional, a further period of 10 trading
days to permit additional acceptances only.
ANNOUNCEMENT OF As soon as practicable after the end of the Swiss
ACCEPTANCE LEVEL: Exchange Offer Acceptance Period in accordance with
Swiss regulations.
AMENDMENT OR WAIVER: (a) Without the prior written consent of
Switzerland, Canada shall not decrease the
Canada Swiss Offer Shares or make any other
change in the terms or conditions of the Swiss
Exchange Offers adverse to the holders of
Swiss Shares, except to implement the
provisions set forth below under the caption,
"Adjustments to Prevent Dilution".
(b) Without the prior written consent of
Switzerland, Canada shall not decrease the
number of Swiss Shares being sought in the
Swiss Exchange Offer, change the form of
consideration proposed to be paid in the Swiss
Exchange Offer or change the Swiss Minimum
Condition.
(c) Without the prior written consent of
Switzerland any waiver or purported waiver by
Canada of the Swiss Minimum Condition shall
not be deemed effective.
ADJUSTMENTS TO PREVENT In the event that (A) Switzerland changes the number
DILUTION: of (i) Swiss Shares or (ii) securities convertible or
exchangeable into or exercisable for Swiss Shares, or
(B) Canada changes the number of (i) Canada Common
Shares or (ii) securities convertible or exchangeable
into or exercisable for Canada Common Shares, issued
and outstanding prior to the time at which the
exchange of Canada Common Shares for Swiss Shares
occurs as a result of a reclassification, stock split
(including a reverse split), stock dividend or
distribution, recapitalization, merger, subdivision,
issuer tender or exchange offer, or other similar
transaction, the Canada Swiss Offer Shares shall be
equitably adjusted; but for the avoidance of doubt no
such adjustment shall be required as a result of the
Chemicals Division Demerger.
GOVERNING LAW OF SWISS Swiss law for governance of the conduct of the Swiss
EXCHANGE OFFER: Exchange Offer in Switzerland and other laws as
appropriate for other jurisdictions.
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DETAILS OF THE FRENCH EXCHANGE OFFER
OFFEROR: Canada, following satisfaction or due waiver of the
conditions to the commencement of the French Exchange
Offer Period.
SHARES TO BE OFFERED FOR: all of the French Shares, with all rights attached
thereto, other than rights relating to the dividend
contemplated in Article 4.1.5(c)(i)(II).
JURISDICTION IN WHICH THE The United States and France and such further
OFFER WILL BE MADE: jurisdictions as are agreed to by France and Canada
(such agreement shall not be unreasonably withheld or
delayed).
OFFER CONSIDERATION: Canada Common Shares at the rate of (i) 1.7816 Canada
Common Shares for each French Ordinary Share,
(ii) 1.9598 Canada Common Shares for each French
Preferred Share and (iii) 0.8908 of a Canada Common
Share for each ADR (the CANADA FRENCH OFFER SHARES).
FRACTIONS: Fractions of Canada Common Shares will not be issued.
Instead, Canada will make arrangements on reasonable
terms for Canada Common Shares representing
fractional entitlements to be aggregated and sold on
the market and the net proceeds of sale (converted at
the spot rate of exchange into French francs) to be
distributed amongst the persons entitled thereto.
OFFER CONDITION: At the end of the French Exchange Offer acceptance
period, Canada having received valid acceptances
(which have not been withdrawn) in respect of French
Shares which carry more than 67% of the total voting
rights calculated on a fully diluted basis at the end
of the French Exchange Offer Acceptance Period (the
FRENCH MINIMUM CONDITION). This condition may be
waived only upon agreement of France and Canada.
FRENCH EXCHANGE OFFER The normal period for a public offer in France (25
ACCEPTANCE PERIOD: trading days) during which acceptance may be made,
subject to:
(i) any extension of such period permitted by the
Applicable Takeover Authority and agreed by
Canada and France; and
(ii) any extension of such period required by the
Applicable Takeover Authority.
FRENCH EXCHANGE OFFER the period commencing with the filing of the formal
PERIOD: French Exchange Offer documentation with the
Applicable Takeover Authorities followed by the
French Exchange Offer Acceptance Period (the FRENCH
EXCHANGE OFFER PERIOD) then followed by such period
as is required to establish that the condition to the
French Exchange Offer has been satisfied or that the
French Exchange Offer has failed.
RIGHT OF WITHDRAWAL OF minimum required by applicable law.
ACCEPTANCES:
ANNOUNCEMENT OF as soon as possible after the end of the French
ACCEPTANCE LEVEL: Exchange Offer Acceptance Period.
AMENDMENT, WAIVER: (a) Without the prior written consent of France,
Canada shall not decrease the Canada French
Offer Shares or make any other change in the
terms or conditions of the French Exchange
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Offer which is adverse to the holders of French
Shares, except to implement the provisions below
under the caption "Adjustments to Prevent
Dilution".
(b) Without the prior written consent of France,
Canada shall not decrease the number of French
Shares being sought in the French Exchange
Offer, change the form of consideration proposed
to be paid in the French Exchange Offer or
change the French Minimum Condition.
(c) Without the prior written consent of France,
any waiver or purported waiver by Canada of the
French Minimum Condition shall not be deemed
effective.
(d) Canada shall be entitled, during the French
Exchange Offer Period and in accordance with and
subject to the provisions of the second
paragraph of Article 5-2-9 of the General
Regulation of the CMF, to withdraw the French
Exchange Offer if France takes immediate and
definitive steps that would result in "a
modification of sa consistence" for the purposes
of that Article to alter its substance and which
would also constitute a breach of Article 4.1.5
of this Agreement.
ADJUSTMENTS TO PREVENT In the event that (A) France changes the number of
DILUTION: (i) French Shares or (ii) securities convertible or
exchangeable into or exercisable for French Shares,
or (B) Canada changes the number of (i) Canada Common
Shares or (ii) securities convertible or exchangeable
into or exercisable for Canada Common Shares, issued
and outstanding prior to the time at which the
exchange of Canada Common Shares for French Shares
occurs as a result of a reclassification, stock split
(including a reverse split), stock dividend or
distribution, re-capitalisation, merger, subdivision,
issuer tender or exchange offer, or other similar
transaction, the Canada French Offer Shares shall be
equitably adjusted.
GOVERNING LAW FOR FRENCH French law for governance of the conduct of the
EXCHANGE OFFER: French Exchange Offer in France and other laws as
appropriate for other jurisdictions.
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SCHEDULE 2
PART A
CONDITIONS TO BE SATISFIED OR WAIVED BEFORE THE MAKING OF THE SWISS EXCHANGE
OFFER
1. The Canada Common Shares issuable to the shareholders of Switzerland
pursuant to the Combination shall have been authorized for listing on the
New York Stock Exchange and The Toronto Stock Exchange upon official notice
of issuance, provided, however, that this condition may be waived only by
Switzerland.
2. The representations and warranties of Canada set forth in this Agreement
shall be true and correct in all material respects as if made on and as of
the date on which the last of the conditions set forth in paragraphs 2, 9
and 10 of this Part A of Schedule 2 shall be satisfied or waived (the SWISS
OFFER CONDITION SATISFACTION DATE) (except to the extent any such
representation or warranty is expressly made as of an earlier date, in
which case it need be true and correct only as of such date); provided,
however, that this condition may be waived only by Switzerland.
3. The representations and warranties of Switzerland set forth in this
Agreement shall be true and correct in all material respects as if made on
and as of the Swiss Offer Condition Satisfaction Date (except to the extent
any such representation or warranty is expressly made as of an earlier
date, in which case it shall need be true and correct only as of such
date); provided, however, that this condition may be waived only by Canada.
4. Canada shall have performed in all material respects all obligations that
are required to be performed by it under this Agreement prior to the
commencement of the Swiss Exchange Offer; provided, however, that this
condition may be waived only by Switzerland.
5. Switzerland shall have performed in all material respects all obligations
that are required to be performed by it under this Agreement prior to the
commencement of the Swiss Exchange Offer; provided, however, that this
condition may be waived only by Canada.
6. There shall have occurred no Canada Material Adverse Effect since the date
of the Agreement; provided, however, that this condition may be waived only
by Switzerland.
7. There shall have occurred no Swiss Material Adverse Effect since the date
of the Agreement; provided, however, that this condition may be waived only
by Canada.
8. No court or Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, law,
ordinance, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Swiss
Exchange Offer or the Combination; provided; that this condition may be
waived only by agreement of both Canada and Switzerland.
9. The waiting period applicable to the consummation of the Swiss Exchange
Offer under the HSR Act and the Competition Canada Act shall have expired
or been earlier terminated and all notices, reports and other filings
required to be made prior to the acquisition by Canada of Swiss Shares
under the terms of the Swiss Exchange Offer, by Switzerland and Canada or
any of their respective Subsidiaries with, and all consents, registrations,
approvals, permits and authorizations required to be obtained prior to the
acquisition by Canada of Swiss Shares under the terms of the Swiss Exchange
Offer by Switzerland and Canada or any of their respective Subsidiaries
(including consents and authorizations under the Investment Canada Act, but
excluding the Swiss EC Clearance and any clearance under the Swiss
Competition Act) from, any Governmental Entity in connection with the
execution and delivery of this Agreement and the consummation of the Swiss
Exchange Offer by Switzerland and Canada shall have been made or obtained
(as the case may be), except those that the failure to make or to obtain
would not, individually or in the aggregate, be reasonably likely to have a
Canada Material Adverse Effect on the assumption that Switzerland is a
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wholly owned subsidiary of Canada and considering Switzerland and Canada
taken as a whole; provided, that this condition may be waived only by
agreement of both Canada and Switzerland.
10. The opt-out shall have become effective. This condition may only be waived
by Canada.
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PART B
CONDITIONS TO BE SATISFIED OR WAIVED BEFORE THE MAKING OF THE FRENCH EXCHANGE
OFFER
1. The issuance of Canada Common Shares in connection with the French Exchange
Offer shall have been duly approved by holders of shares of Canada Common
Shares constituting the Requisite Vote; provided, however, this condition
may be waived only by agreement of both Canada and France.
2. The Canada Common Shares issuable to the holders of French Shares pursuant
to the Combination shall have been authorised for listing on the New York
Stock Exchange and The Toronto Stock Exchange upon official notice of
issuance; provided, however, that this condition may be waived only by
France.
3. The representations and warranties of Canada set forth in this Agreement
shall be true and correct in all material respects as if made on the date
on which the last of the conditions set forth in paragraphs 1, 2, 11 and 12
of this Part B of Schedule 2 shall be satisfied or waived (the FRENCH OFFER
CONDITION SATISFACTION DATE) (except to the extent any such representation
or warranty is expressly made as of an earlier date, in which case it need
be true and correct only as of such date), provided, however, that this
condition may be waived only by France.
4. The representations and warranties of France set forth in this Agreement
shall be true and correct in all material respects as if made on and as of
the French Offer Condition Satisfaction Date (except to the extent any such
representation or warranty is expressly made as of an earlier date, in
which case it need be true and correct only as of such date); provided,
however, that this condition may be waived only by Canada.
5. Canada shall have performed in all material respects all obligations that
are required to be performed by it under this Agreement prior to the
commencement of the French Exchange Offer Period; provided, however, that
this condition may be waived only by France.
6. France shall have performed in all material respects all obligations that
are required to be performed by it under this Agreement prior to the
commencement of the French Exchange Offer Period; provided, however, that
this condition may be waived only by Canada.
7. There shall have occurred no Canada Material Adverse Effect since the date
of the Agreement; provided; however, that this condition may be waived only
by France.
8. There shall have occurred no France Material Adverse Effect since the date
of the Agreement; provided; however, that this condition may be waived only
by Canada.
9. No court or Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, law,
ordinance, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the French
Exchange Offer or the Combination; provided, however, this condition may be
waived only by agreement of both Canada and France.
10. The waiting period applicable to the consummation of the French Exchange
Offer under the HSR Act and the Canadian Competition Act shall have expired
or been earlier terminated and the European Commission has adopted a
decision under Articles 6(1)(b) or 8(2) of Council Regulation No.
4064/89/EEC clearing the French Exchange Offer and all notices, reports and
other filings required to be made prior to the acquisition by Canada of
French Shares under the terms of the French Exchange Offer by France,
Switzerland and Canada or any of their respective Subsidiaries with, and
all consents, registrations, approvals, permits and authorizations required
to be obtained prior to the acquisition by Canada of French Shares under
the terms of the French Exchange Offer by France, Switzerland and Canada or
any of their respective Subsidiaries (including consents and authorizations
under the Investment Canada Act) from, any Governmental Entity (but
excluding the CMF and the COB) in connection with the execution and
delivery of this Agreement and the consummation of the Combination, the
Exchange Offers and the other transactions contemplated
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hereby by France, Switzerland and Canada shall have been made or obtained
(as the case may be), except those that the failure to make or to obtain
would not, individually or in the aggregate, be reasonably likely to have a
Canada Material Adverse Effect (on the assumption that France is a wholly
owned Subsidiary of Canada and considering France and Canada as a whole);
provided, however, this condition may be waived only by agreement of both
Canada and France.
11. The S-4 Registration Statement shall have become effective under the
Securities Act. No stop order suspending the effectiveness of the S-4
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been initiated or be threatened, by the SEC.
12. Unless this Agreement has been terminated with respect to Switzerland, the
Chemicals Division Demerger shall have been completed; provided, however,
that this condition may be waived only by France.
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SCHEDULE 3
RESIDENCY MATTERS: (a) The Canada Business Corporation Act (the
"CBCA") provides that, except as provided in
paragraph (b) below, a majority of the directors
of a corporation incorporated under the CBCA
must be resident Canadians (the "Majority
Canadian Resident Requirements"). If the
Majority Canadian Resident Requirements apply,
the CBCA also provides that the majority of the
members of each committee of the board of
directors of a corporation incorporated under
the CBCA must be resident Canadians.
(b) The CBCA also provides that not more than
one-third of the directors of a holding
corporation need be resident Canadians if the
holding corporation earns in Canada directly or
through its subsidiaries less than 5% of the
gross revenues of the holding corporation and
all of its subsidiary bodies corporate as shown
in the most recent financial statements of the
holding corporation and its subsidiary bodies
corporate as at the end of the last completed
financial year of the holding corporation (the
"Holding Corporation Test").
(c) Based on financial information with respect to
Canada, France and Switzerland, Canada expects
to meet the Holding Corporation Test during the
year ending December 31, 2000 in circumstances
where:
(i) only the French Exchange Offer is
completed;
(ii) only the Swiss Exchange Offer is
completed; or
(iii) both the French Exchange Offer and the
Swiss Exchange Offer are completed.
(d) Canada is seeking a legislative amendment to
the CBCA which would reduce the number of
Canadian residents required on the board of
directors of a corporation incorporated under
the CBCA. Any amendment to the CBCA that
provides that not more than one-quarter of the
directors of corporation incorporated under the
CBCA must be resident Canadians is referred to
in this Schedule as the "Legislative Amendment".
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(e) If: (i) either or both of the French Exchange
Offer and the Swiss Exchange Offer is completed;
(ii) a majority of the directors of Canada to be
appointed in accordance with this Schedule 3
will not be resident Canadians; (iii) the
Legislative Amendment has not been obtained and
either (x) the Board of Directors has not
determined at the time that each of the French
Exchange Offer and the Swiss Exchange Offer is
completed that Canada will satisfy the Holding
Corporation Test during 2000 or (y) the Board of
Directors has not determined at the end of the
third quarter of 2000 that Canada will satisfy
the Holding Corporation Test during 2001, Canada
will immediately seek shareholder approval
(supported by a positive recommendation of the
board of directors of Canada) authorizing all
matters in respect of which shareholder approval
is required to effect the export of Canada's
incorporation to another jurisdiction in Canada
in which there are no requirements with respect
to resident Canadians on the Board of Directors
and the committees thereof and authorizing the
Board of Directors to take the steps necessary
and desirable to give effect thereto. Canada
will take all steps necessary to effect the
export as soon as practicable following receipt
of shareholder approval.
(f) If: (i) either or both of the French Exchange
Offer and the Swiss Exchange Offer is completed;
and (ii) the Legislative Amendment has not been
obtained on or before December 31, 2000 (whether
or not a majority of the directors of Canada are
resident Canadians and whether or not the board
of directors of Canada determines that Canada
will satisfy the Holding Corporation Test during
2001), Canada will seek shareholder approval
(supported by a positive recommendation of the
board of directors of Canada) at its annual
meeting of shareholders in 2001 to authorize all
matters in respect of which shareholder approval
is required to effect the export of Canada's
incorporation to another jurisdiction in Canada
in which there are no requirements with respect
to resident Canadians on the Board of Directors
and the committees thereof and authorizing the
Board of Directors to take the steps necessary
and desirable to give effect thereto. Canada
will take all steps necessary to effect the
export as soon as practicable following receipt
of shareholder approval.
(g) If the Legislative Amendment is obtained: (i)
prior to the date of the meeting of shareholders
described in paragraph (e) or (f) above, the
export resolution may be withdrawn and not voted
on by the shareholders; or (ii) following the
date that shareholder approval is obtained
pursuant to paragraph (e) or (f) above, but
prior to the effective date of the export, the
export need not be effected.
BOARD OF DIRECTORS:
NUMBER OF DIRECTORS: 12, if both of the Exchange Offers are completed.
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COMPOSITION: (a) (i) If either of the Exchange Offers is
completed, the Board of Directors will
include the following four nominees of
Canada:
Xxxx Xxxxx
Xxxxxxx Xxxxxx
Xxxxxx Xxxxx
Guy Saint-Pierre
(ii) If the France Exchange Offer is
completed, the Board of Directors will
include the following four nominees of
France:
Xxxxxxx Xxxxxxxx
Xxxx Xxxxxx Xxxxxx
Xxxx-Xxxxxxxx Xxxxxx
Xxxx Mansion
(iii) If the Swiss Exchange Offer is
completed, the Board of Directors will
include the following four nominees of
Switzerland:
Xxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxxxxxx
Xxxxx X. Xxxxx
(b) (i) If the Swiss Exchange Offer is completed
before the France Exchange Offer, the
nominees of Canada will appoint an
additional nominee to the Board of
Directors and Canada and Xxxxxx
Xxxxxxxxxx will take the requisite steps
such that Xx. Xxxxxxxxxx will qualify
as soon as practicable as a resident
purposes of the CBCA so that there
will be Canadian for an aggregate of
five nominees for Canada and four
nominees for Switzerland.
(ii) If the France Exchange Offer is
subsequently completed, such additional
nominee of Canada will resign.
(iii) If the Combination Agreement has been
terminated with respect to France, the
nominees of each of Canada and
Switzerland to the Board of Directors
each shall be entitled to appoint an
additional nominee to the Board of
Directors so that there will be an
aggregate of six nominees of Canada
and five nominees of Switzerland.
(c) If the France Exchange Offer is completed
before the Swiss Exchange Offer, then the
nominees of Canada will appoint two additional
nominees and the nominees of France will
appoint one additional nominee, which
additional nominees will resign from the Board
of Directors if the Swiss Exchange Offer is
subsequently completed.
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NON-EXECUTIVE CHAIR: The Board of Directors will have a non-executive
Chair who will be appointed by the Board annually on
consideration of the recommendation of the Governance
Committee. The initial Chair will be Xxxx Xxxxx.
COMMITTEES: The Board of Directors will have such committees as
it determines, provided that it will at all times
have Audit, Governance and Human Resources and
Compensation Committees, which initially will consist
of an equal number of persons nominated by each of
Canada and the other Parties in respect of which an
Exchange Offer is completed. These nominees will be
the following individuals:
Audit -- Guy Saint-Pierre (Canada), Yves Mansion
(chair) (France) and Xxxxxx Xxxxxxxxxx (Switzerland);
Governance -- Xxxx Xxxxx (chair) (Canada), Xxxxxxx
Xxxxxxxx (France) and Xxxxxx Xxxxx (Switzerland);
Human Resources and Compensation -- Xxxxxx Xxxxx
(Canada), Xxxx-Xxxxxxxx Dehecq (France) and Xxxxxx
Xxxxxxxxxx (chair) (Switzerland).
The Governance Committee will be chaired by the
nominee of Canada and, if the Swiss Exchange Offer is
completed, the Human Resources and Compensation
Committee will be chaired by the nominee of
Switzerland and, if the France Exchange Offer is
completed, the Audit Committee will be chaired by the
nominee of France. If only one of the Exchange Offers
is completed, the vacant chair will be an individual
agreed by Canada and the Party in respect of which an
Exchange Offer was completed.
So long as the Majority Canadian Resident
Requirements are applicable to Canada's Board of
Directors and so require, each of the committees of
the Board of Directors will be expanded to include
that number of additional members who are resident
Canadians and who are approved by the Board of
Directors sufficient to result in a majority of the
members of the committee being resident Canadians.
MEETINGS: At least half of the meetings of the Board of
Directors will be held outside of Canada to xxxxxx
communications and relationships with the global
constituencies of Canada.
SENIOR OFFICERS: It is intended that the CEO will be Xxxxxxx Xxxxxx
and that the President and COO will be Xxxx Xxxxxx
Xxxxxx. It is also intended that Xx. Xxxxxx will
retire after approximately two years, when the
successful integration of the three companies has
been completed. It is intended that Xx. Xxxxxx
succeed Xx. Xxxxxx as CEO.
PRINCIPAL OFFICES: The legal headquarters will be located at Montreal,
Canada.
Additionally, the office of the CEO will be in New
York. There will be regional headquarters in Europe.
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SCHEDULE 4
BASIC TERMS OF THE
CHEMICALS DIVISION DEMERGER
1. BASIC TRANSACTION
Prior to the launch of the Switzerland Exchange Offer, Switzerland intends
to transfer its Chemical and Energy businesses ("Butterfly Business" or the
"Business") into a separate legal structure and to demerge the Business to
Switzerland's shareholders. The holding company to be formed for the Business is
referred to as "Butterfly AG", and the demerger transaction as the "Butterfly
Demerger" or the "Demerger".
The Butterfly Business is to be spun off free of any net debt on a combined
basis as of July 1, 1999. If any such net debt is determined to have existed on
such date, a corresponding amount of cash or cash equivalents will be
transferred by Switzerland to Butterfly.
The Butterfly Demerger will be made pursuant to an agreement to be entered
into between Switzerland and Butterfly AG (the "Separation Agreement"). The
Separation Agreement will reflect in all material respects the general
principles set forth below.
2. DEFINITION OF THE BUTTERFLY BUSINESS
The Butterfly Business, as a fully operational and autonomous business,
will include (i) the chemicals business of Switzerland (Switzerland's fine
chemicals and specialities and its intermediaries and additives divisions) and
the (ii) the energy business of Switzerland, as currently conducted primarily by
the entities listed in ANNEX I (the "Butterfly Companies"). The Butterfly
Business will include all of the assets and liabilities of whatever kind which
are attached to, or which relate primarily to the Butterfly Business. For the
avoidance of doubt, all assets and liabilities of the Butterfly Companies are
included in the Butterfly Business unless specifically excluded herein.
Switzerland believes that, except for the assets and liabilities identified on
ANNEX II, virtually all of the assets and liabilities of the Butterfly Business
are held through the Butterfly Companies.
An unaudited pro-forma combined balance sheet (the "Combined Balance
Sheet") of Butterfly as of December 31, 1998 (the "Pro Forma Accounting Date")
is attached as ANNEX III. In order to support the determination of net debt,
Butterfly will confirm to Switzerland that the Butterfly Business has been
operated in the ordinary course since December 31, 1998.
Furthermore, the Business will include:
a) U.S.$234 million in cash; provided that if the France Exchange Offer
is not duly completed by Canada the calculation amount to be included
shall be reduced to US$67 million through an adjustment to the net debt
in paragraph 6;
b) subject to the provisions of the Agreement, all liabilities and
obligations relating to, or caused by, the Butterfly Business, it being
understood that Butterfly Group shall, as of the Separation Effective
Date, not have net debt (to be calculated in accordance with paragraph
6); and
All employees working essentially full time for the Butterfly Business,
plus certain individuals employed in central headquarters or other common
divisions or entities needed for the efficient operation of Butterfly and not
required for the operation of Switzerland will to the extent not already
employees of a Butterfly Company become employees of Butterfly.
3. SEPARATION OF THE BUTTERFLY BUSINESS
Switzerland will use commercially reasonable efforts to transfer the
Business to Butterfly as soon as practicable (the "Separation Date"). For
accounting and tax purposes and as between the parties the transfer is intended
to have been made to the extent possible under applicable law with effect as of
July 1, 1999 (hereinafter the "Separation Effective Date").
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a) Switzerland will transfer the entire Butterfly Business to Butterfly
AG or to any of the Butterfly Companies directly or indirectly owned by
Butterfly AG by way of (i) capital contributions or (ii) purchase and
sale agreements to the extent possible and reasonable under applicable
tax laws. In return, Switzerland will initially be entitled to shares of
Butterfly (the "Consideration Shares") and/or certain loans against
Butterfly (hereinafter the "Loans") (the allocation between
Consideration Shares and Loans will be made in the manner that in
Switzerland's judgment is most tax efficient to both parties in the
aggregate in the context of the Butterfly Demerger).
b) Butterfly AG will assume the liabilities and obligations related
thereto attached to the Butterfly Business. Butterfly will use
reasonable efforts to cause third parties to approve the assumption by
Butterfly or a designee of Butterfly of, and to release or discharge
Switzerland from, any liabilities to the extent necessary to fulfil this
term. If any third party does not provide any necessary release or
discharge, arrangements will be made which would allow such obligations
to be assumed by, or otherwise economically transferred to Butterfly, at
no greater costs to Switzerland than it would have incurred had the
third party approved the assumption immediately.
c) Except as otherwise specifically agreed, Butterfly will be responsible
from the Separation Effective Date for the terms and conditions of
employment of the employees of central headquarters or other common
divisions or entities who have become employees of Butterfly as of the
Separation Date; Switzerland will be responsible for all claims relating
to the employment of such employees arising prior to the Separation
Effective Date. Xxxxx to check boiler-plate wording and propose
modifications To the extent that the employment of such employees is
terminated prior to the Separation Date, other than in contemplation of
the Demerger, Switzerland will be responsible for any claims related to
such termination. To the extent that the employment of such employees is
terminated on or after the Separation Date, Butterfly will be
responsible for any claims related to such termination.
d) As a general matter, joint pension funds or pension provisions will be
split in proportion to the respective projected benefit obligations to
the employees remaining with Switzerland (or funds controlled by
Switzerland), and the projected benefit obligations to the employees
covered or to be covered by Butterfly. Notwithstanding the foregoing, if
the split of any such pension funds or provisions is governed by
mandatory local rules, such pension funds or pension provisions will be
split according to such mandatory local rules but adjustments will be
made to the extent practicable in order that, on an aggregate basis, the
principles provided for in the previous sentence are given effect.
e) If a legal transfer of an asset of the Butterfly Business or of shares
in a Butterfly Company cannot be effected on the Separation Date as of
the Separation Effective Date, Switzerland will to the extent possible
transfer beneficial ownership or otherwise agree a solution which best
approximates the situation that would have existed had the legal
transfer occurred with the same financial effect as if it had been
transferred on the Separation Effective Date.
f) It is intended that the Butterfly Business will be a fully
operational and autonomous business and not have to rely on services,
assets or other facilities of Switzerland; however, Switzerland and
Butterfly will enter into commercially reasonable cooperation and
service agreements under which each will provide necessary transitional
services to the other. It is expected that such services will generally
be provided for a customary arm's length fee or, if such customary fee
cannot be ascertained, at costs plus a 5% margin. The energy supply
agreements between Switzerland and Butterfly will continue for their
agreed duration in accordance with their terms.
4. RESTRUCTURING OF BUTTERFLY
In order to create the Butterfly Group, Switzerland will complete an
internal restructuring which will create a separate legal structure, with
Butterfly AG as the holding company for the Butterfly Group.
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The internal restructuring described below (the "Internal Restructuring")
will comprise the following key steps (subject to amendment by Switzerland if
necessary or advisable for a more efficient restructuring process):
1. French, Benelux and German subsidiaries of the Butterfly Business
will be acquired by A-L Europe BV.
2. U.K. subsidiaries in the Butterfly Business will be reorganized under
a new UK intermediate holding company held by a new Dutch
intermediate holding company (Dutchco)
3. French, Dutch and German companies will be contributed to Dutchco.
4. Dutchco will be distributed to Switzerland.
5. Switzerland will form a Jersey subsidiary to acquire the Singapore
Group in the Butterfly Business.
6. US Butterfly Business subsidiaries will be reorganized under two
intermediate holding companies.
7. Brazilian sales office in the Butterfly Business will be acquired by
new Brazilian subsidiary.
8. Remaining minority (0.0001%) interest in French subsidiary of
Switzerland business will be sold to an Switzerland group company.
9. All top tier subsidiaries of Switzerland in the Butterfly Business
will be transferred to Butterfly in exchange for shares and capital
contribution.
10. Butterfly and Switzerland enter into Separation Agreement.
As part of the Internal Restructuring, certain of steps 1-9 above (or
comparable steps in any amended structure) may result in income, capital gains,
transfer or other taxes to Butterfly and/or Switzerland. These taxes are
expected largely to be offset, directly or indirectly, by tax losses available
to either Butterfly or Switzerland. To the extent that any such steps result in
taxes payable by Switzerland or a Switzerland subsidiary (i.e. by entities that
are not part of the Butterfly Business), Butterfly will indemnify the
Switzerland company that is subject to that tax, except to the extent that such
tax liability may be offset by a tax loss carryforward or other tax credit
available to Switzerland or any subsidiary of Switzerland at the Separation
Date. Notwithstanding this, Butterfly will be responsible for any such taxes
only if and to the extent that Switzerland or any subsidiary of Switzerland has
paid an aggregate amount in cash of $20 million resulting from the Internal
Restructuring. For purposes of the foregoing indemnity, the operations and
transactions contemplated by paragraphs 5 and 6 below shall be deemed to form
part of the Internal Restructuring (except to the extent that such taxes results
from actions or inaction referred to in 8).
Following the Internal Restructuring, the Butterfly Group will be organized
substantially as set out in ANNEX IV (subject to amendment by Switzerland if
necessary or advisable for a more efficient restructuring process)
5. DEMERGER
(A) PRINCIPLE
It is intended that Butterfly AG will be spun off to the Switzerland
shareholders on the basis described below and in accordance with the
Swiss Tax Ruling (as defined below), as soon as reasonably practicable
(hereafter "the Demerger Date")
(B) STRUCTURE
Switzerland will demerge Butterfly AG and thus the Butterfly Business
to Switzerland's shareholders by a rights offering structure. This
structure involves the following steps:
- Butterfly AG will increase its share capital by issuing a maximum
of 6,616,796 shares with a nominal value of CHF 10 each, whereby
Switzerland will not exercise its pre-emptive rights and whereby a
syndicate of banks (the "Underwriters") will underwrite the new
shares and pay the nominal value of the underwritten shares to
Butterfly AG;
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- Rights to purchase newly issued Butterfly shares from the
Underwriters will be allocated to the shareholders of Switzerland
who will receive one right per Switzerland share, each such right
(a "Right") giving its holder an option to purchase on a given date
(the "Payment Date") one Butterfly share from the Underwriters for
CHF 10 per Butterfly share.
- Switzerland shareholders may either exercise the Rights allocated
to them or sell such Rights during a limited period of time prior
to the last date the Rights can be exercised;
- shares of Butterfly AG as to which the rights have not been
exercised or as to which no payment occurs on the Payment Date will
be sold back by the underwriters to Butterfly at CHF 10 per share;
(c) TRANSFER OF CONSIDERATION SHARES AND LOANS
Switzerland will transfer the Consideration Shares and the Loans to
Butterfly AG against consideration. The consideration to be paid to
Switzerland for the Consideration Shares and for the Loans will be
deemed to constitute a financial debt owed by Butterfly to Switzerland
for purposes of the net debt calculation. Alternatively, if the
Parties so agree, and if such action enables Switzerland to retain the
benefit of the Swiss Tax Ruling referred to in paragraph 8 below and
does not affect the calculation of net debt under paragraph 6
Switzerland will sell the Consideration Shares at market value and
transfer the proceeds of the sale to Butterfly.
(d) Each Party shall be responsible for the accuracy and completeness, to
relevant prospectus standards, of the information with respect to it
included in any disclosure documents related to the Butterfly Demerger
and the listing of the Butterfly shares.
6. DEBT FREE STATUS OF BUTTERFLY AND CASH EQUALIZATION
The Butterfly Business is intended to be effectively debt free as of the
Separation Effective Date. Therefore, if Butterfly has net debt (as described
below) as of the Separation Effective Date, Butterfly shall receive from
Switzerland an amount in cash or cash equivalents within a short time after the
net debt statement described below is finalized in an amount designed to put
Butterfly in the situation in which it would have been had the Butterfly
Business been transferred free of net debt as of the Separation Effective Date.
In order to achieve this, the following provisions will apply (eliminating any
duplication).
(a) As soon as is practicable after the Separation Date, Butterfly will
prepare a statement determining "net debt" for the Butterfly Business
which will be prepared under international accounting standards (IAS)
applied on a basis consistent with (A) those used in the preparation
of the Combined Balance Sheet and (B) those used in the preparation of
Switzerland's historical financial statements, and reflect the
following items as of the Separation Effective Date on a consolidated
basis:
(i) all financial third party debt of the Butterfly Business;
(ii) all financial net debts of the Butterfly business owed to
Switzerland or its subsidiaries; and
(iii) all pension liabilities relating to the German business to the
extent they are recorded on Butterfly's balance sheet as of the
Separate Effective Date;
less: (w) cash, cash equivalents and refundable deposits within the
Business;
(x) all costs attributable to Butterfly but paid by Switzerland;
(y) all payments by Butterfly to employees transferred to Butterfly
and relating to their employment for Switzerland prior to the
Separation Date referred to in paragraph 3 (c); and
(z) any consideration paid by Butterfly to Switzerland for the
transfer of any portion of the Business to Butterfly AG or its
subsidiaries pursuant to the Separation Agreement.
(b) The remainder of the sum of (i), (ii) and (iii) above less the
sum of (w) through (z) above shall, if a positive amount,
constitute net debt for the purposes hereof.
(c) Switzerland will make a payment to Butterfly if required to eliminate
any net debt together with interest from the Separation Date.
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(d) For the avoidance of doubt, the following items will not be considered
in the determination of net debt:
- Net cash proceeds (after stamp taxes) received by Butterfly in
connection with the subscription for shares in its capitalization
as part of the Butterfly Demerger transaction;
- The costs to be borne by Butterfly in connection with the Butterfly
Demerger;
- the CHF 2 million lump sum payment for expenses of the Butterfly
Demerger as contemplated below.
- the cash amount described under clause (a) of paragraph 2;
(e) To the extent that any items used in the calculation of net debt as
described in clause (a) are recorded at subsidiaries that are not
wholly-owned, the relevant amount will be given effect after
multiplying it by the decimal equivalent of Butterfly's effective
ownership interest in such subsidiary.
(f) The net debt calculation shall be subject to a customary post-closing
audit and any payments made pursuant to this Section 6 shall be
adjusted in accordance with the results of this audit.
7. REPRESENTATIONS AND WARRANTIES
It is intended that Butterfly be provided with all of the assets (and
assume all of the liabilities) currently held by Switzerland and its
subsidiaries prior to the Separation Effective Date and related to the Butterfly
Business. To give effect to this, the Separation Agreement will contain transfer
provisions and representations/warranties (together with an undertaking by each
party to take further action necessary to give effect to the relevant transfer):
(a) from Switzerland to Butterfly with respect to:
- absence of liens other than as related to the Butterfly business;
- intellectual property rights for Butterfly business;
- contractual rights relating to Butterfly business; and
- liabilities not relating to Butterfly business.
(b) from Butterfly to Switzerland with respect to:
- liabilities relating to the Butterfly business Appendix A hereto.
together in the case of (a) and (b) with any representation and warranties
necessary in connection with the issuance of rights and shares in Butterfly
AG and the listing of Butterfly AG shares.
8. TAX TREATMENT
Subject to the conditions specified in the tax ruling (the "Swiss Tax
Ruling" dated August 6, 1999) received from the relevant tax authorities in
Switzerland, the Butterfly de-merger will not be subject to Swiss taxes to
Switzerland or Butterfly.
Switzerland and Butterfly will each indemnify the other for losses (and
related costs) resulting from any action or inaction by it or by a third party
with respect to it that causes the conditions to the Swiss Tax Ruling not to be
satisfied.
9. INDEMNIFICATION
In addition to the cross indemnity for tax treatment above, Switzerland and
Butterfly will also each indemnify the other for losses relating to or arising
from:
(a) liabilities incurred or paid by the other party relating to the
indemnifying party's business;
(b) breaches of representations, warranties or covenants in the Separation
Agreement.
The parties acknowledge that no indemnifiable "loss" will have been
suffered in respect of any liability or contingent liability relating to the
Business which does not exceed the remaining total of provisions which have been
made in the Combined Balance Sheet for such kind of liability or contingent
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liability (after deducting any and all previous such liabilities which have been
charged against such provisions);
In addition, no indemnity will be available for any claim under clause (b)
above
- if the breach is not material (for the purpose of this provision a
breach shall not be material if it can be remedied for less than
CHF 1.5 million); or
- if, and to the extent, all material claims made under this indemnity do
not exceed a total amount of CHF 20 million.
In the event that Butterfly, within five years of the Separation Date,
distributes (by way of dividend, distribution, demerger or the like) for nil or
nominal consideration, a subsidiary or a business, which, individually or in the
aggregate, together with any such previous distribution, has net assets which
exceed one-third of the consolidated net assets of Butterfly, that subsidiary or
business will provide, effective upon such distribution, a joint and several
guarantee of the indemnification obligations of Butterfly relating to the tax
issues described in paragraphs 4 and 8, and liabilities for environmental
matters of Butterfly and its subsidiaries.
The indemnity will be subject to a two-year survival period, except for
those claims relating to taxes (which shall have a five year survival period)
(but for the avoidance of doubt shall cover the consequences of actions or
inactions that occur during the five years after the demerger) and environmental
liabilities (which shall survive in perpetuity).
10. COSTS
Subject to the provisions of the Separation Agreement, or those of the
transition service agreements, Butterfly shall bear all costs, expenses and
taxes arising in connection with the Butterfly Demerger (except as described
elsewhere herein), it being understood that Switzerland shall pay a lump sum of
CHF 2 million as a participation to such costs.
11. DISCLOSURE
Switzerland and Butterfly will provide each other with reasonable access on
an ongoing basis to information relevant to their respective obligations and to
verify the satisfaction of the other party's obligations in respect of the
Butterfly Demerger.
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ALL ANNEXES TO THE COMBINATION AGREEMENT HAVE BEEN OMITTED.
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